Vestas Plans to Restructure After Cutting Sales Forecast

Vestas Wind Systems A/S (VWS), the biggest wind-turbine maker, will announce a significant change to the corporate structure after cutting its revenue forecast for the second time since October. The stock fell 17 percent.

A total of 1 billion euros ($1.3 billion) of revenue expected in 2011 will be booked this year because of delays in connecting renewable energy projects to the electric grid and bad weather that stalled construction of several projects, the Aarhus, Denmark-based company said yesterday in a statement. The shares opened at 58 kroner, down from 69.60 yesterday in Copenhagen.

The announcement adds to a series of earnings misses that have depressed Vestas shares about 90 percent from their peak in 2008. 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 subsidy cuts in Europe.

Vestas now expects sales of about 6 billion euros for 2011, down from the 6.4 billion euros it forecast on Oct. 30, which itself was a reduction from 7 billion euros. The two revenue deferrals total about 1 billion euros. During a conference call with investors, Chief Executive Officer Ditlev Engel said problems starting up a factory in Germany were under control, though revenue would be delayed.

“We are looking at very carefully how come we have experienced these kind of challenges when taking new technologies to the market,” Engel said on a conference call.

No New Equity

The company gave no details of the program being announced on Jan. 12, saying only that it wouldn’t involve tapping equity markets for more cash and that it has no plans to seek any kind of strategic investor.

Delays relating 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.

Earnings before interest and tax for last year that were expected to be about 255 million euros were revised to an implied forecast of zero, according to the statement.

About 100 million euros of the shortfall is due to development costs for the company’s V112-3.0 MW turbine and GridStreamer technology for its 2-megawatt design.

As a result, the company’s EBIT margin will be “approximately zero percent,” with cash flow remaining positive in 2011.

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. Some customers postponed signing contracts for a “number of major orders from 2011 to 2012,” according to the statement.

Delays in Europe

The delayed turbine orders mostly were from customers in Europe, the company said during the call, and most fourth- quarter sales originated in Europe.

The company said the commissioning problems at its generator factory in Travemuende, Germany, were “under control” and not expected to hurt operations in 2012.

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.

To contact the reporters on this story: Sally Bakewell in London at; Justin Doom in New York at

To contact the editor responsible for this story: Reed Landberg at

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