Citing ‘economic difficulties in the Western economies,’ Ditlev Engel, president and CEO of Denmark-based turbine manufacturer Vestas, took steps to reduce company costs in the face of uncertainty in several key markets, including the U.S.
Vestas says it will reduce its fixed costs globally by at least 150 million euros annually by the end of 2012. Additionally, the company has abandoned its 2015 sales goal of 15 billion euros ($21 billion) in revenue and a margin on earnings before interest and tax of 15%.
The company says that despite unsatisfactory earnings in 2011, its business remains strong.
‘We have satisfied customers, all of our production units are extremely busy and we recorded a strong order intake in October,’ Enegel notes. ‘However, we believe that at least the Western economies are heading for even more economic difficulties in the years ahead. This will affect Vestas and the rest of the wind power industry.’
Policy uncertainty surrounding the extension of the production tax credit (PTC) in the U.S. was also a key factor.
‘Due to uncertainty about the PTC, Vestas has received an extraordinarily large number of orders from the U.S. for installation by the end of 2012,’ Engel says. "However, this situation will change for the worse if the tax credit lapses from 2013.’