Evwind, Wind Energy

Vestas Seeks 20 Percent Stake Sale, Cuts 3000 More Jobs

Vestas Wind Systems A/S (VWS) is seeking to sell a stake of as much as 20 percent and said it’s reducing headcount by 3,000 to raise the staff cuts by the biggest wind turbine maker to almost a third over two years.

Vestas shares fell as much as 17 percent today, the biggest drop since Jan. 4. They were down 12 percent to 27.10 kroner at 1 p.m. in Copenhagen.

The yield on Vestas bonds due in 2015 jumped to 18.6 percent as their price dropped to the lowest since Aug. 14.

Vestas generated revenue of EUR 1,988m in the third quarter of 2012 – an increase of 49 per cent to the year-earlier period. EBIT before special items increased by EUR 105m to EUR 13m. The EBIT margin before special items was 0.7 per cent – an improvement of 7.6 percentage points compared to the loss-making third quarter 2011. EBIT after special items was EUR (140)m – negatively impacted by writedowns of development projects and other assets. The free cash flow decreased to EUR (142)m from EUR 276m in the third quarter of 2011. The net debt at 30 September 2012 amounted to EUR 1,287m; an increase of 12 per cent during the quarter. The intake of firm and unconditional wind turbine orders was 401 MW in the third quarter of 2012 and the value of the wind turbine backlog amounted to EUR 8.3bn at 30 September 2012. In addition to the wind turbine order backlog, Vestas had service agreements with contractual future revenue of EUR 4.9bn at the end of September 2012, and thus the value of the combined backlog of wind turbine orders and service agreements stood at EUR 13.2bn. The high safety level at Vestas’ workplaces improved by 20 per cent and the share of renewable energy increased to 58 per cent.

Vestas retains its full-year guidance of an EBIT margin before special items of 0-4 per cent and revenue of EUR 6,500-8,000m, including service revenue, which now is expected to rise to nearly EUR 900m versus the previous guidance of approx EUR 850m. Service EBIT margin before allocation of Group costs is still expected to be approx 17 per cent. Shipments are expected to be approx 6.3 GW. As a consequence of writedowns of R&D projects, closure of R&D centres and scaling down of the activities in India, special items are now expected to amount to EUR 225-250m versus the previous guidance of EUR 75-125m. Investments are lowered by EUR 100m to EUR 350m. The free cash flow is now expected to amount to EUR (500)-0m versus the previous guidance of a positive free cash flow. The change is due to weaker expectations for the 2012 order intake and uncertainty on the exact timing of cash inflows and outflows during the last weeks of 2012 and the first weeks of 2013.

Vestas is evaluating its manufacturing footprint including identification of outsourcing and divestment opportunities and is preparing the organisation for a manufacturing (shipment) level of approx 5 GW. Consequently, Vestas expects to reduce its headcount further during 2013 through divestments, continuation of hiring freeze and layoffs. This is expected to bring down the number of employees to around 16,000 by the end of 2013 compared to 22,721 by the end of 2011 and an expected number of around 18,000 by the end of 2012 or early 2013. The additional cost savings are expected to amount to more than EUR 150m on an annual basis, reducing the costs by more than EUR 400m from year-end 2011 to year-end 2013.

Before the end of 2013 Vestas expects to save an additional EUR 150m, which will bring the yearly cost reductions in Vestas since the end of 2011 to a total of EUR 400m. The increased cost reductions will be realised through divestments, continuation of the hiring freeze and some additional layoffs.
CEO Ditlev Engel says this further intensification of cost saving initiatives happens as part of the plan to create a scalable and flexible business model ready to adapt quickly to the changing market conditions.
“Vestas is progressing faster than expected in executing the plan we have earlier announced to lower the operating costs of the company. We expect 2013 to be a tough year for the wind industry and to adapt to future uncertain market development we have decided to further intensify our cost saving plan to make sure we are scalable and able to react fast to the challenges we expect in the market in the coming years.”

Workforce reductions ahead of plan

As Vestas is executing the cost out initiatives ahead of plan the company now expects to be around 18,000 employees by the end of 2012 or early 2013 compared to the earlier announced 19,000.
The change from 19,000 to 18,000 is due to already planned reductions, employees working through their termination period as well as temporary contracts not being renewed.
As part of the current intensification, Vestas expects to reduce the number of positions in the company by an additional 2,000 before the end of 2013 – meaning that Vestas expects to be around 16,000 employees at the end of 2013. In the beginning of 2012, Vestas employed around 22.700 people.
“However difficult it is to make further cost savings and also further reduce the workforce, it is simply necessary in order to create an even leaner and more agile Vestas to ensure the company’s continued profitability in a very uncertain and unstable wind turbine market,” says Ditlev Engel and concludes: “I am however pleased to say that we expect a part of these reductions to happen through divestments, which means that our employees will maintain their jobs, only they will be working for a different employer than Vestas”.
Every single day, Vestas wind turbines deliver clean energy that supports the global fight against climate change. Wind power from Vestas’ more than 47,000 wind turbines currently reduces carbon emissions by approximately 55 million tons of CO2 every year, while at the same time building energy security and independence.
Today, Vestas has delivered wind energy in more than 70 countries, providing jobs for around 19,000 passionate people at our service and project sites, research facilities, factories and offices all over the world. With 65 per cent more megawatts installed than our closest competitor and more than 53 GW of cumulative installed capacity worldwide, Vestas is the world leader in wind energy.