Vestas Cuts Sales Forecast for Second Time on Project Delays
Stock Chart for Vestas Wind Systems A/S (VWS)
The company now expects sales of about 6 billion euros ($7.8 billion) last year, down from its previous estimate of 6.4 billion euros. Since October, it has pared the figure by about 1 billion euros, which will be booked in the first three quarters of 2012, according to a statement today.
Vestas also said it would announce a “significant change” to its corporate structure on Jan. 12, though it ruled out tapping equity markets for cash. The shares have fallen almost 90 percent from their high in 2008 after a series of earnings misses including the latest announced on Oct. 30.
Vestas and its rival General Electric Co. (GE) are suffering from slower demand growth and narrowing margins caused by rising competition from Asian companies and reductions in support from governments in the U.S. and Europe working to curb deficits.
In October, Aarhus, Denmark-based Vestas reduced its forecast to about 6.4 billion euros from 7 billion because of delays in boosting output from a new factory in Germany. Today, it said those delays were under control, though bad weather was holding up completion of a number of its projects.
Delays and Disruptions
Delays related to weather, connecting wind plants to the grid “and other disruptions” meant some projects would not be counted as revenue until the first quarter of this year. That means the company expects to reduce its earnings before interest and tax for last year by about 130 million euros, according to the statement.
“We are looking at very carefully how come we have experienced these kind of challenges when taking new technologies to the market,” Ditlev Engel, the chief executive officer of Vestas, said on a conference call.
Vestas also said it had orders of for turbines with 7.4 gigawatts of capacity last year worth 7.3 billion euros, in step with its forecast of between 7 gigawatts and 8 gigawatts despite some customers that postponing the completion of contracts for a “number of major orders from 2011 to 2012”.
About 100 million euros of the shortfall is due to development costs for the company’s GridStreamer technology and its V112-3.0 megawatt turbine. Higher costs and revenue delays will make Vestas’ EBIT margin “approximately zero percent” for 2011, according to the company.
The company said the commissioning problems at its generator factory in Travemuende, Germany, were “under control” and not expected to negatively affect operations this year.
The company will present “a significant change of the whole organization” on Jan. 12, it said in the statement. Vestas is due to announce full-year orders data in its annual report on Feb. 8.
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