Vestas May Sell Foundries, Colorado Tower Factory to Cut CostsAlex Morales
Vestas Wind Systems A/S, the Danish wind-turbine maker that’s lost money for the last two years, may sell its tower factory in Colorado and foundries in Europe and China to cut costs.
The manufacturer last month listed 124 million euros ($160 million) of property, plant and equipment for sale when it published its annual report for 2012. Vestas aims to sell plants that don’t fall within its core activities of making blades, control systems and assembling turbines, Chief Operating Officer Jean-Marc Lechene said today by phone.
“There are some manufacturing activities which can be considered non-core and we can better focus resources on those areas where we make a difference,” he said. When asked what he considers “non-core,” he listed “towers, machining and castings.”
Vestas is trying to return to profit after seeing its share price plunge to as low as 3.3 percent of the 2008 record. The factory sales are part of the Aarhus-based company’s efforts to cut fixed costs by 400 million euros over the two years through the end of 2013 and reduce its workforce to 16,000 by year-end from 22,721 in 2011.
Lechene declined to specify which factories will be sold. Vestas owns a tower factory in Pueblo, Colorado and four foundries in China, Germany, Sweden and Norway. The company also owns a machining factory, which refines cast metal products into finished components, in Lem, Denmark.
The stated value suggests Vestas is trying to sell three or four factories, said Daniel Patterson, an analyst at SEB AB in Copenhagen. He listed the Colorado plant, the foundries -- especially the one in China -- and a generator factory in Travemuende, Germany, as likely candidates.
“The generator factory is spanking new,” he said. “Why not try to sell that to someone who makes a lot of generators, like ABB Ltd. or Emerson Electric Co.’s Leroy Somer?”
Lechene said Vestas will want to keep buying components from any factories it sells. “We want be sure that any new owner would operate those factories according to our standards,” he said. “That search may take some time.”
Patterson said Vestas is “on the way” to achieving its cost-reduction goals, and that if they accomplish them while receiving orders of 4.5 gigawatts to 5 gigawatts a year, within a couple of years, the share price could more than double to 100 kroner. He has a buy rating on the stock and a price target of 65 kroner.
Vestas shares have almost doubled since hitting a low of 23.25 kroner on Nov. 20, their lowest intraday price since 1998. The shares fell 0.3 percent to 46.44 kroner at 4:07 p.m. in Copenhagen.