Times, 18 August 2009
Vestas profits plunge after British job cuts
by Elizabeth Judge
Vestas, the Danish wind turbine company which last week shut two British plants with the loss of 425 jobs, unveiled a worst-than-expected drop in profits of more than a third.
The group, whose Isle of Wight factory was the scene of an 18-day sit-in by angry workers, revealed that pre-tax profits in the three months to the end of June dropped from €90 million at the same time last year to €59 million.
The group said its margins had been hit by severance payments to workers both in the UK and in Denmark, where it made 1,142 people redundant as well as a scaling-up of production in the US and China.
However, it stuck to its full-year sales and profits forecast with revenues of €7.2 billion and an operating profit margin of between 11 per cent and 13 per cent.
The Danish group found itself at the centre of a political storm after it announced plans to shut its Isle of Wight and Southampton factories.
Members of the Climate Rush campaign group chained themselves to the north London home of Lord Mandelson, the Business Secretary, in an “act of solidarity” for the workers about to lose their jobs.
They accused the Government of hypocriscy when, two weeks after announcing plans for a low-carbon Britain, Vestas was being forced to shut down because of an apparent lack of demand for wind turbines in Britain.
Vestas, which secured a court order to remove the protesting workers, said that demand was too low to justify continuing production in Britain.
In an interview today, Ditlev Engel, the chief executive of Vestas, said that while Northern Europe continued to pose a challenge, the group was now seeing a pick-up in business following the credit crunch. “We are seeing there is a pick-up in the market. We are seeing things moving again and there is life out there even though we cannot see it in the order backlog.”
The group’s order backlog at the end of the second quarter was €4 billion, although it has secured a further €700 million of orders since then.
Global government initiatives were beginning to take effect, the group said, while banks and financing institutions, which had pulled out of the market during the downturn, were returning to the sector.
Prices of a components had also peaked, it said, with no further price rises expected this year.
The credit crunch, the group said, had had a big impact on the industry, triggering falling orders as projects were shelved and seeing funding drop away.
Vestas claim of low demand in the UK was contradicted by a survey by the British Wind Energy Association. It found that Britain’s countryside and coastline will be dotted with 2,700 new wind turbines by 2012 – more than double the existing total.