Decline in share prices reversed -- Turbine manufacturer shares pick up under war on terrorism

While share prices the world over continue to suffer in the wake of September 11, those of Europe's three publicly traded wind turbine manufacturers are recovering after only about two weeks on the floor. Shares in Vestas, NEG Micon and Nordex have climbed back to their level before the terrorist attacks.

Indeed, September 11 had the effect of arresting a steady downward slide in the shares of all three, a turnabout which may well be connected to the recent public focus on the vulnerability of centralised electricity generation. Reducing that vulnerability is expected to increase the price of conventional electricity, making decentralised wind power -- not easy to collectively bring to a halt -- still more attractive.

Although the prices of NEG Micon and Vestas, both traded on the Copenhagen bourse in Denmark, and Nordex, traded on the Neuer Markt exchange in Frankfurt, Germany, have improved considerably since their September 11 dive, they are all lower than at the start of the year. Most noteworthy is Vestas' fall from DKK 500 for a DKK 1 share in the spring to DKK 250-300.

Vestas realism

Analysts point out that Vestas and other wind shares were over valued at the start of the year and today's price is more realistic. But a much discussed analyst report released in August by French investment bank PNB Paribas -- which warned of expectations of a short life for both Vestas and NEG Micon -- had its impact. The bank warned that giants of the energy world like Siemens and ABB could put an end to small wind companies at one stroke if they decided to enter the business of wind turbine manufacture from scratch. For that reason Vestas shares should only be trading for DKK 200, said the bank.

Experts, also from Siemens and ABB, who have followed wind power's technology course for years, have the PNB Paribas report with a pinch of salt. Indeed, Merrill Lynch suggested a price level of DKK 300, while Morgan Stanley had no qualms about the spring price of DKK 500. Other analysts have cynically suggested the Paris report was aimed at increasing turnover in shares and commission at PNB Paribas -- a successful strategy to judge by the share trading activity that resulted from their analysis.

At the same time as Vestas' shares were falling, however, the company's long standing managing director, Johannes Poulsen, announced he would be handing over the reins to his financial director, 43-year-old Svend Sigaard, in April. Since Poulsen had just been voted one of the best 50 company leaders in the world by Business Week, his decision was an unwelcome one among investors. Vestas' confidence in itself remains unperturbed, however, with expansion of three of its facilities in Denmark continuing.

NEG Micon holds on

NEG Micon is also expanding and replacing a director. A new DKK 120-150 million factory is being built for its Dancontrol subsidiary at Hammel in mid-Jutland. Leaving the directorship is Poul Anker Lübker, the last of the original directors from Nordtank Energy Group (NEG) before its fusion with Micon. Lübker is taking a director post at VTP Holding in Aalborg, a company owned by Nordtank's former boss, Vagn Trend Poulsen. Lübker has been responsible for NEG Micon's retrofit program of gear boxes installed in 1200 of its turbines worldwide following a series failure which almost cost the company its life two years ago. The retrofits are being carried out in conjunction with gear box maker Flender.

As well as also being hit by the PNB Paribas effect, NEG Micon has been busy fielding rumours that after a slow start to 2001 it could not live up to its end of year projections for profit (DKK 200-250 million) and turnover (DKK 5.5 billion) and was about to adjust them downwards. But the wind business traditionally has its busiest period in the second half of the year, 2001 being no exception, particularly with the installation rush in the US to meet the December 31 deadline for expiry of the current federal Production Tax Credit.

NEG Micon director Torben Bjerre Madsen declines to comment, pointing out that any readjustment must be announced to the stock exchange first. But he adds: "If we weren't expecting to reach the stated projections we should have informed the exchange -- and we haven't done so." NEG Micon's share price was hovering at DKK 500 for a DKK 10 share in the spring, but fell steadily to DKK 175 in mid September before picking up to DKK 225-250, for a DKK 10 share, last month.

Nordex growth

Three-quarters of the way through the year, Nordex turnover was EUR 8.9 million compared with EUR 8.5 million in the same period last year. Also Nordex shares were on a downward slide in August and early September, falling from around EUR 9 to EUR 6.5. During the past couple of months the price has swung between EUR 7 and EUR 8 for a single share. The company has also obtained a new major shareholder, Germany's Westdeutsche Landesbank Girozentral (Windpower Monthly, November 2001).

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