Danish wind turbine manufacturer Vestas has announced yet another round of layoffs as a part of the cost-cutting strategy revealed in its third-quarter financial report.
After several waves of workforce reductions this year, the company said it now expects to cut an additional 1,000 employees by the end of this year or early next year, reducing its total headcount from the originally stated 19,000 to 18,000.
The change from 19,000 to 18,000 is due to already planned reductions, employees working through their termination period and temporary contracts not being renewed, Vestas says.
Vestas also expects to reduce the number of positions in the company by an additional 2,000 before the end of 2013, meaning that the company expects to have around 16,000 employees by the end of next year. By comparison, at the beginning of this year, Vestas employed around 22,700 people.
The company says that with these measures, it expects to save an additional 150 million euros by the end of 2013. The increased cost reductions will be realized through divestments, continuation of the hiring freeze and some additional layoffs, Vestas adds.
"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," notes CEO Ditlev Engel.
"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," he adds.
Financial results
Vestas reported revenues of 1.988 billion euros in the third quarter – a 49% increase over last year. Earnings before interest and taxes (EBIT) before special items increased by 105 million euros to 13 million euros. The EBIT margin before special items was 0.7% – an improvement of 7.6 percentage points compared to the loss-making third quarter of 2011. EBIT after special items was -140 million euros, which was negatively impacted by writedowns of development projects and other assets.
The company's net debt as of Sept. 30 amounted to 1.287 million euros – a 12% increase from the prior quarter. The intake of firm and unconditional wind turbine orders was 401 MW in the third quarter, and the value of the wind turbine backlog amounted to 8.3 billion euros as of Sept. 30.
In addition to the wind turbine order backlog, Vestas had service agreements with contractual future revenue of 4.9 billion euros at the end of September, and thus, the value of the combined backlog of wind turbine orders and service agreements stood at 13.2 billion euros.
Vestas adds that it is evaluating its manufacturing footprint, including outsourcing and divestment opportunities, and is preparing the organization for a manufacturing (shipment) level of approximately 5 GW.
