Restructuring hits Vestas revenue

DENMARK: Vestas has failed to hit its own targets as its revenue slumped 26% to EUR 1.2 billion, while pre-tax loss extended to EUR 38 million from EUR 5 million a year ago.

Vestas V90 turbines in action
Vestas V90 turbines in action

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But there were positives for the Danish wind giant as the quarterly order intake showed an explosive 74% increase to 1,641MW compared to the second quarter of 2012. Earnings before interest and tax also stayed in positive territory though still declining to EUR 12 million, from EUR 40 million previously.

The results represented a "decent performance" said vice president investor relations Lars Villadsen. "The first half of the year is the low season in the industry, so it is to be expected to be a bit slow. But we have driven our fixed-capacity costs down, so we can handle more volume and start to increase our revenues," he said.

Due to uncertainty surrounding some customers' ability to comply with contractual obligations, Vestas has resolved to lower the order backlog value by EUR 400 million to EUR 4 billion.

Industry analyst Aris Karcanias of Navigant's BTM said: "Restructuring has been very heavy, which means that the accounts take a significant hit. However, they have turned things around, but just haven't met the expectations that they themselves set.

"Vestas' order book is the most diverse across the widest range of countries and this puts them in a strong position."

Margins were down, but Villadsen looked to explain this, commenting: "In the second quarter last year we handed over some very high-margin products, so that makes it a tough comparable. Compared with the first quarter, the margins have improved significantly."

Despite the lukewarm results, shares in the firm jumped 5% on Wednesday morning on the news that controversial CEO Ditlev Engel has been asked to step down.

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