Vestas Falls as Turbine-Maker Sees Sales Stalling
Vestas Wind Systems A/S declined in Copenhagen trading for the first time in seven days after the world’s largest maker of wind turbines forecast sales and profitability will be unchanged next year.
The stock fell 9.5 kroner, or 5.3 percent, to close at 169.20 kroner. That brought the year-to-date loss to 47 percent. The shares earlier traded as low as 165 kroner, the least in four years.
Vestas expects 2010 revenue of 6.8 billion euros ($9.3 billion) and an earnings ratio before interest and tax of 7 percent of sales, when adjusting for costs from job cuts and closing plants, according to a new accounting policy published today. Sales and Ebit margin in 2011 will be “at the same level” as this year, the Randers, Denmark-based company said.
“It looks a bit weaker than I had expected for 2011,” Jacob Pedersen, an analyst at Sydbank A/S, said by telephone. “One could have expected higher profitability next year given the drastic cost-cut measures that Vestas is carrying out.”
Vestas said in October it will fire 3,000 workers and close factories in Denmark and Sweden as demand falls. The credit crisis has prompted banks to restrict loans to developers that buy turbines from Vestas and rivals such as Germany’s Siemens AG and General Electric Co. Europe’s sovereign debt crisis has also limited prospects for economic growth in the region.
“The reason must be that Vestas’ profitability is under pressure from lower contract prices and at the same time, capacity is probably still not utilized,” said Pedersen, who rates the shares an “overweight.”
Ebit Adjustment
Vestas didn’t provide a non-adjusted 2010 Ebit margin for 2010. The costs related to job cuts and factory closings will be 140 million euros to 160 million euros, Vestas said. They will be booked this quarter and won’t lower the Ebit margin in 2011.
The company kept its 2011 forecast for new orders at 7,000 megawatts to 8,000 megawatts in capacity.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net.
To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net.
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