Vestas Seeks to Sell 20 Percent Stake, Reduces Headcount

on Nov 9, 2012
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On November 7, Bloomberg reported that the world’s largest wind turbine manufacturer by sales, Vestas Wind Systems A/S (CPH:VWS) was seeking to sell a stake of 20 percent and was also reducing its headcount by 3,000.

**Vestas’ Third Quarter Results**
Aarhus-based Vestas released its financial results for the third quarter of 2012, reporting that its free cash flow decreased to €142 million (£89.1 million), from €276 million in the same quarter of 2011. In addition, the company also reported a 12 percent quarterly increase in net debt, which amounted to € 1,287 million in the quarter ended September 30.

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Bloomberg reports that following the release of the Q3 results, the shares of the Danish wind turbine maker fell 13 percent to 26.65 kroner at the close of Copenhagen trading, the most in three months.
“You can see that the cash flow has been quite negative for 2012,” noted Klaus Kehl, analyst at Nykredit, as quoted by the Financial Times. “I believe that sooner or later they will have to do something.”

**Looking for a Partner**
Vestas, which has been struggling with a poor market for wind turbines as well as with the aftermath of an ill-timed expansion at the peak of the financial crisis, has been the subject of takeover speculation. In August, the company indicated that it was looking for “potential strategic cooperation” with the Japanese company Mitsubishi Heavy Industries (TYO:7011). The FT, however, quotes Dag Andersen, Vestas’ chief financial officer, as saying that the company was still looking for a partner to take a 20 percent stake.

!m[Danish Wind Turbine Manufacturer Reports Decrease In Cash Flow ](/uploads/story/763/thumbs/pic1_inline.png)Bloomberg in turn reports that Mr Andersen pointed out in an interview that it was important that Vestas had “investors who understand the company, the segment that we are working in and also have a longer-term view.” Both Mr Andersen and Vestas’ CEO Ditlev Engel, however, declined to comment on talk of a potential “strategic cooperation” with Mitsubishi Heavy.

**Cost-Saving Plan**
In the meantime, Vestas is trying to cut costs, with the company announcing further intensification of cost saving initiatives. “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,” noted Mr Engel in a company press release.
The cost saving measures include further headcount reductions, with Vestas noting that it will reduce its staff from 19,000 to 16,000 by the end of 2013. These 3,000 reductions come on top of a prior announcement of 3,700 job cuts. Bloomberg quotes Mr Engel as saying that some staff reductions will come through the selling of facilities, meaning that Vestas employees may retain jobs by working for another company. Other job reductions are expected to come from not filling vacant positions.
“The company is going back to basics,” notes Mr Andersen, as quoted by the FT, adding that 3,700 of the job cuts will be of white-collar workers and noting that Vestas will focus purely on making turbines and providing services to wind-farm operators.

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