Wind News

Tuesday 18 August 2009

Danish-based wind turbine manufacturer Vestas, which last week closed two UK operations with the loss of 425 jobs, saw its year-on-year profits drop by 34% in the second quarter of 2009, it revealed today (August 18).

The company, which is one of the world's largest manufacturers of wind operating systems, cited reduced gross margins - the money left from sales revenue after deducting production costs - and increased running costs as having contributed to figures which saw post-tax profits fall from 65 million euros (£56 million) in quarter two of 2008, to just 43 million euros (£37 million) in quarter two 2009.

It also revealed a decline in earnings before deductions of 15% over the same period, from 92 million euros (£79 million) to 78 million euros (£67 million), and a drop in the number of orders shipped, with 12% fewer wind turbines being shipped and 20% fewer wind turbine systems.

UK

Vestas stressed that the situation in Northern Europe had had a particular impact on its current situation, with over 1,000 staff being made redundant from its Danish factories in addition to last week's shut-down of its UK manufacturing operations in Southampton and the Isle of Wight (see this newenergyfocus story).

Describing activity in Northern Europe as "limited", the firm reiterated its claims of a lack of opportunities in the UK in particular, stating that: "In the UK, the development of the onshore market continues to be slowed down by very cumbersome local planning and permit processing."

And, it raised the possibility of further potential cut-backs in its Northern European operations as it moves production into China and the USA, by saying that "Vestas continues to have some excess capacity in Northern Europe relative to local market prospects".

Half-year

Despite this, Vestas saw an 11% increase in revenues in quarter two 2009 compared to quarter two for 2008 (from 1.094 billion euros/£939 million to 1.211 billion euros/£1.04 billion), and, in terms of the first six months of 2009, it saw revenue increase by 29% (from 1.795 billion euros/£1.54 billion to 2.316 billion euros/£1.987 billion) and earnings before deductions rise by 22% (from 126 million euros/£108 million to 154 million euros/£132 million).

And, the company retained the forecasts it made earlier this year that expected its overall revenue for 2009 as a whole to rise by 20% compared to 2008 to 7.2 billion euros (£6.17 billion).

It cited a significant number of orders in the pipeline in supporting of the forecast, explaining that: "The order backlog of firm and unconditional orders amounted to EUR 4bn (£3.4bn) at 30 June 2009. In spite of the weak order intake since the onset of the credit crisis, Vestas retains its forecast for 2009."

"Since the end of the reporting period, Vestas has recorded an order intake of EUR 0.7bn (£0.6bn) with unchanged payment patterns. Additionally, Vestas' corporate Contract Review Board will be evaluating several contracts with a total value of more than EUR 4.4bn (£3.7bn) in the upcoming period," it added.

Potential

Claiming that both the US and Chinese markets offered particular potential for contracts, Vestas confirmed that it planned to continue to increase its production presence in those territories.

"Vestas is investing heavily in new capacity in the USA and China, as the long-term goal is to supply 'North America from the USA', 'Europe from Europe' and 'Asia from Asia'," it explained.

And, despite the closure of its UK manufacturing operations, the company revealed that investments in its research and development centre on the Isle of Wight were continuing "according to plan", and that it planned to increase the headcount there from 110 to 150 by the end of 2009.

Last month, the Department of Energy and Climate Change revealed that it was planned to make around £6 million in funding available to Vestas R&D facility on the island (see this newenergyfocus story).