Vestas Marks Completion Of Two-Year Turnaround Plan


In its annual financial results report, Vestas says it completed the company's two-year turnaround program at the end of 2013 and has delivered on the main focus areas over the program's period.

The company's turnaround plan, initiated in 2011, included measures to lighten its global assets and reduce its workforce by 30% in an effort to adjust to slowing market conditions and return to profitability. In fact, the company says the primary driver of its cost reductions was the cutback from 22,721 employees at the end of 2011 to 15,497 workers at the end of 2013.

According to the financial report, revenue amounted to EUR 6.084 billion for 2013, which was above the EUR 5.5 billion the company had most recently expected. This revenue compares to EUR 7.216 billion in 2012 and EUR 5.836 billion in 2011. Meanwhile, EBIT before special items was EUR 211 million last year, compared to EUR 4 million in 2012 and a recorded loss of EUR 38 million in 2011.

Vestas' order intake in 2013 included EUR 5.8 billion for 5.964 GW, up from 2012's EUR 3.8 billion for 3.74 GW but less than 2011's EUR 7.3 billion for 7.397 GW. The company's order backlog for wind turbines came in at EUR 6.8 billion in 2013, compared to EUR 7.1 billion in 2012 and EUR in 9.6 billion.

The report also shows that Europe and Africa accounted for 60% of annual revenue in 2013, while the Americas and Asia Pacific accounted for 28% and 12%, respectively

According to Vestas, the U.S. market continued its historic cycle of "boom and bust" in 2013. After a record-breaking 2012, where more than 13 GW was installed prior to the potential expiry of the production tax credit (PTC), the market came to a standstill in the first half of 2013, the company adds.

However, with the extension of the PTC making all projects started in 2013 and commissioned before the end of 2015 eligible for the tax credit, Vestas says order intake picked up in the second half of the year.

The company says it delivered a "modest" 102 MW in the U.S. in 2013, but it also received firm and unconditional orders of around 1.4 GW with an additional potential of more than 2.5 GW. Notably, a 400 MW order in Texas for Duke Energy Renewables was the largest order for Vestas in three years.

Outside the U.S., Vestas says it continued to receive large orders in North and South America. A 299 MW project ordered by Enbridge and EDF was the largest order for Vestas in Canada ever. Likewise, Vestas received the hitherto largest orders in Uruguay and Chile in 2013. In Mexico, Vestas says a 155 MW order emphasized the company's position in the region. However, the company notes the 396 MW Marena Renovables project in the country continued to see delays in construction due to opposition from minority groups. In Brazil, Vestas delivered 334 MW during 2013.

Looking forward into this year, Vestas says it expects revenue to amount to a minimum of EUR 6 billion with an EBIT margin before special items of at least 5% and a free cashflow of at least EUR 300 million.

"A double-digit EBIT margin in the fourth quarter and a free cashflow generation of more than EUR 1 billion in 2013 are major achievements for Vestas and our dedicated employees," says Anders Runevad, who, as part of an executive shakeup, was appointed group president and CEO of Vestas in August 2013. "Yet, the satisfactory completion of the two-year turnaround is at least as important, as it creates a solid starting point for the future strategy for Vestas, where Vestas will continue to focus on profitable growth."

"The completion of the turnaround does not mean that Vestas has resolved all of its challenges," Board Director Bert Nordberg notes in a statement. "With our new executive management team in place, we continue to optimize Vestas in order to bring down cost of energy and increase value creation for our shareholders."

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