Vestas Tumbles After Turbine Blade Prototype Breaks

Vestas Tumbles After Turbine Blade Prototype Breaks
A six- to seven-meter portion came off the blade of the test V112 wind turbine in Lem, western Denmark, Michael Holm, a Vestas spokesman, said. Photographer: Ken James/Bloomberg

Vestas Wind Systems A/S fell to its lowest in almost two years in Copenhagen trading after the world’s largest wind turbine maker said a blade snapped on a prototype and Danske Bank A/S downgraded the stock.

A six- to seven-meter (20 to 23 feet) portion came off the blade of the test V112 wind turbine late yesterday in Lem, western Denmark, Michael Holm, a Vestas spokesman, said today from Randers, Denmark. “We’re looking into the root cause. We don’t see this as a design error.”

Vestas shares declined as much as 14.7 kroner, or 6.7 percent, to 203.3 kroner ($34.72) and closed at 209.40 kroner, their lowest since November 2008, after the company announced it was maintaining its full-year forecast. Vestas has dropped 34 percent this year after twice lowering its sales forecasts.

“This is a blow to the reputation of a flagship turbine,” said Glen Walker, a technology analyst in London at Bloomberg New Energy Finance. “They have to go out tomorrow and sell this turbine, when yesterday they had a blade break.”

Even so, the breakage isn’t thought to be a design issue and isn’t related to the drive train, the part of the turbine that includes the gearbox, which had faults in an earlier Vestas turbine, Walker said. The V112 is also at an early enough stage that the company can rectify any faults before the turbine reaches large-scale production, he said.

Danske Bank today downgraded the stock to “reduce” from “buy.” Later in the day, Vestas said it won an order from an unspecified company “with worldwide operations” for 400 megawatts of turbines with an option for 1,000 megawatts more.

Australian V112 Order

Vestas shares lost almost a quarter of their value on Aug. 18 after the turbine-maker lowered its forecasts for sales and operating profit margin in 2010 while posting a bigger second-quarter loss than the average forecast by 15 analysts. The company cut its 2010 sales forecast to 6 billion euros ($7.6 billion) from 7 billion euros after an earlier reduction in February.

The V112 has a capacity of 3 megawatts and is the latest turbine to be added to the Vestas sales range. The turbine is designed for use in areas with lower-wind speeds, and has onshore and offshore versions.

“This is a negative but we don’t know if it’s only a minor disruption or it has more severe consequences,” said Jacob Pedersen, an analyst at Sydbank A/S who has an “overweight” rating on Vestas shares. “This is a product hailed by Vestas as proven and that creates some uncertainty.”

The company on Aug. 12 said it won an order for 140 of the turbines for the largest wind power project in Australia from 2011 through 2013. The Macarthur Wind Farm in Victoria is being developed by AGL Energy Ltd. and Meridian Energy Ltd.

“The turbine is not for delivery until mid-2011,” Holm said. “There’s plenty of time to take this incident into account.”

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