Vestas Delays Flagship Offshore Turbine on Back of “Disappointing” First Quarter Results

on May 8, 2012

After reporting a bigger-than-expected quarterly operating loss, the turbine manufacturing giant Vestas(VWS:CPH) has announced a delay in the development of its innovative 7MW wind turbine. At the beginning of the month the Danish company reported operating losses of €245 million for the period January-March 2012,compared to losses of €69 million for the same period last year.The results, which the company described as “disappointing”, were blamed on cost overruns and faulty equipment. Vestas also revealed that it has undergone a series of structural changes in recent months, including a management reshuffle and wave of redundancies, which have also affected the company’s performance.

After posting its worse-than-expected first quarter results, Vestas confirmed that it was approached by potential partners interested in developing the next-generation 7MW wind turbine due to its unique specifics. The massive wind turbine is planned to have a rotor diameter of 164 meters and according to the company,it will be a perfect combination of proven technology and innovation. The world’s biggest wind turbine is designed for the newly-developed offshore wind farms in deeper waters further offshore. Vestas is eyeing the next round of British wind power deployments,such as the UK’s Round 3 programme, as the vehicle through which it can sell its new flagship offshore turbine. But to align the development of the impressive 7 MW turbine to the company’s new offshore wind production outlook, Vestas has postponed the proposed installation of the machine prototype in Denmark to 2014, instead of 2013 as initially planned. The delay, as already mentioned, was caused by the company’s recent performance, which according to Vestas’ financial experts does not give solid ground for the development of the new product.

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!m[](/uploads/story/81/thumbs/pic1_inline.png)Asked whether the delay to the turbine prototype could weaken Vestas’ position in the offshore market, the company’schief executive,Ditlev Engel admits: “Of course it would have been nice to have it earlier, but we need to look at the totality.”Notwithstanding the circumstances, Vestas representatives insist that the company will press ahead with its now-delayed 7MW wind turbine with or without a partner. Several companies have enquired about jointly developing Vestas’ offshore turbine business, but for now it has not been announced what type of companies the potential partners are or exactly how many have approached the turbine manufacturer.“We are evaluating these to see if they make sense,” Engel said.

Despite the poor quarterly results, Vestas has actually proven its potential to develop the new wind turbine prototype and keep its position on the offshore market. The company maintained its full-year guidance with revenue of €6.5 to €8 billion and shipments totalling around 7GW and investments of €550 million.The Danish wind turbine manufacturer also announced that in the first quarter of the year it has recorded its highest level of firm and unconditional order intake. The orders totalled 1,269MW, which amounted to €10 billion at the end of March 2012. Having installed more than 40 per cent of the world’s offshore wind turbines so far, Vestas hopes its latest product, the 7MW wind turbine will reinvigorate its business and maintain its leadership in the growing offshore wind industry.


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