Vestas (OMX: VWS) continues to be under pressure as intense competition in renewable energy generation and an outlook where government subsidy plans are being dissembled is shown in the sinking share price trajectory. The stock has slid under 50 DKK, which is a multi-year low.
A Chinese competitor Xinjiang Goldwind (SEHK: 2208, SZHE:002202) today warned that its profits will be close to zero on Q1 2012, down from over 200 million RMB a year ago. Goldwind is among the largest companies in the sector. The company blamed slower industry growth and lower prices for the decline.
While vestas curretly sits on top of its largest order backlog in history and the Q1 announced order headiline number does not look terrible in comparison to previous years either, the company missed on some big deals it was expected to be a part of during the first quarter. The margins on both these orders and those carried on from last year are also quite low.
Vestas is also still investigating the cause of the fire in V112-3.0 MW turbine that took place at the end of last month in Germany The production of these turbines has been too costly to begin with, not to mention such added worries. The turbines that were paused as a precaution should be gradually coming back online towards the end of this month.
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