Vestas and former CFO butting heads

Former CFO of Danish wind turbine manufacturer Vestas Wind Systems A/S (OMX: VWS) Henrik Nørremark and the company are entering a legal dispute according to his lawyer Morten Samuelsson. He plans to call CEO Ditlev Engel to testify on the matters. Nørremark was let go in the beginning of this year following profits warning that dealt a blow to the credibility of the company in the eyes of investors. At that time other senior executives were also let go and newspaper Jyllands Posten writes about their grievances with the company as well in its paper print.

Vestas had received heads up from Jyllands Posten that details would be carried in the newspaper today and announced yesterday that it had terminated severance agreement with the former CFO in the beginning of September. Vestas claimed it had discovered Nørremark had overstepped his powers in binding the company to two agreements in India, which resulted in multi-million Euro losses for the company. The unusual step to go public with such detailed accusations prior to completion of the matter was said to result from a thorough audit and legal investigation. According to Samuelsson, it comes just days after a written explanation on the matters in question was delivered to Vestas.

Vestas hoping Obama wins

Vestas Wind Systems (OMX: VWS) has started the day strongly on a Bloomberg report that the U.S. Senate Finance Committee seems primed to extend production tax credit for wind energy for one year. The looming expiry had the markets betting for a very difficult 2013 for the entire industry. It has been widely report that Republican Presidential candidate Mitt Romney would wish to end wind energy support and support oil & gas industry. He would however face opposition within his party regarding such ideas. Vestas has said that intense negotiations regarding the tax break are ongoing.

Vestas announces preliminary Q2 figures, stock shoots up

Vestas Wind Systems decided to disclose details for Q2 2012 couple weeks ahead of schedule and also update on the financial situation. During the quarter the company produced and shipped a lofty number of 2160 MW of turbines. Revenue grew by 46% to over 1.6 billion Euros and EBIT before special items appears to be positive at around 40 million. Free cash flow was still clearly negative. The stock has climbed around 15% to trade near 30 DKK soon following the disclosure.

The company says that its lenders have agreed to defer half-year 2012 covenants testing and have allowed Vestas to continue drawings on those despite the losses since the latter part of last year up until the previous quarter. The issue is supposed to be temporary given the strong order backlog on top of the improved Q2 earnings. On the other hand, details of order intake weren't mentioned, so the backlog likely came down somewhat. Vestas says that the drawing allowed are sufficient to continue normal operations and expects to meet financial covenants soon. Of course it is still somewhat worrisome that such a situation can arise.

First emission, then takeover rumour

Vestas Wind Systems (OMX: VWS) continues to be a stock of choice for those who can benefit from market moving rumours. Today the stock sank to a historic low of 25.56 DKK, accounting to an about 700 million Euro market value, after whispers of a potential dilution following and emission together with sell recommendations escalated into a 10% slide. Then a quick reversal came after Caixin Online wrote citing sources ”close to the situation” that Ming Yang Wind Power Group is interested to acquire Vestas for a sum between 1.5 and 2 million Euros. Caixin also said that an official from industry regulator confirmed those intentions. This pushed Vestas quickly back above 30 DKK, from where it was taken down by back under 28 DKK with renewed comments about the target price cuts and a denial of the buyout rumour.

Banks targeting Vestas?

Vestas Wind Systems (OMX: VWS) quickly turned on a dime after several days of rapid advances, going from nearly +4% to -5% in a hurry. It was pressured by market rumours that its lenders have made an ultimatum for the company to restructure its balance sheet . The Sunday Times made the claim without naming any sources, saying that the banks including Royal Bank of Scotland and HSBC are asking a comprehensive financial restructuring plan. Vestas spokesman said that as per company policy, it does not comment on speculation. The rumours also included claims that Vestas is going to put itself on the market for a sale or to seek a share issue.

Vestas has a large revolving credit facility it had not used at least until the end of last year. The wind turbine maker has nearly 170 000 investors, many of whom are Nordic retail owners burned by the seemingly unstoppable slide of the stock that is also swinging wildly amidst such news. Newspaper borsen.dk wrote that a group of investors have started an association called Vestas Shareholders that aims to give small investors a bigger say on the decision process and some muscle in the event of a hostile takeover attempt.

Vestas nets two significant orders

Vestas is performing strong today despite weak overall sentiment after some positive news. Yesterday’s 90 MW order for 30 V90-3.0 MW turbines with a 15-year service contract from Sweden placed by O2 Wind Ab for Glötesvålen project, which is actually being built for Ikea, was followed by the firming of a 216 MW offshore order from Belgium today. That one came from Northwind NV and will involve 72 V112-3MW turbines for Northwind Offshore Wind Farm. A 15-year service contract is also included. Both project deliveries are either next year or in 2014, which keeping in mind the current large commissioning activity and tied-in working capital is certainly not a bad thing. Furthermore Danske Markets today opinionated to Bloomberg, that they do not see a share issue from Vestas as likely in the short term.

Vestas gets big service contract

EDP Renováveis (Euronext: EDPR) has contracted Vestas Wind Systems (OMX: VWS) for service & maintenance of over 1100 turbines with a total capacity of 1897 MW in the U.S. and Europe for up to seven years. For Vestas, which in total now has 22000 turbines or about 37.5 GW in service, the contract is the largest of its kind to date. It includes a variety of services and products involving scheduled and unscheduled maintenance and consumables with an availability guarantee. The contract communicated in afternoon trading yesterday helped the Danish turbine manufacturer avoid most of the terrible battering that cyclical stocks received yesterday.

Vestas closes small turbines factory in China, drops factory plans in UK

This morning Vestas Wind Systems (OMX: VWS) said it has concluded internal analysis suggesting continued low market demand for kilowatt platform and thus has decided to close production at Hohhot, Inner Mongolia, China. Back in 2009 when the said factory opened, Vestas said that its analysis and customer discussions showed that the new almost entirely China-made V60-850 kW was the best response to the land use and wind capacity challenges in China. Hohhot facility lies near important wind power development region, where Vestas just last week landed a new contract for larger turbines. The production area is about 45 000 square metres with blades and nacelles production and 300-350 people will lose their jobs.

Vestas will continue to honour existing contracts for kilowatt turbines including V52-850 kW and still expects considerable service revenues. Vestas expects about 10 million Euros in annual savings from the move. The closing is expected to come to force over the summer. Its costs are covered within the annual special items guidance of 50-100 million Euros. Following the action, Vestas will maintain production in Tianjin and Xuzhou and offices in Beijing and Shanghai. It foresees total number of employees at around 2600 following the current optimization program. Vestas’ competitor Shuzlon (BSE: 532667, NSE: SUZLON) agreed to sell its manufacturing subsidiary Suzlon Energy Tianjin to China Power (Tianjin) New Energy Development Company for 60 million USD over the weekend.

Last week Vestas said it has given up on its plans for a factory in Sheerness, Kent, UK since it was unable to land orders for the new V164-7.0 MW turbines that were to be produced there. The plant would have created around 2000 jobs in the area in total. Vestas had indicated the willingness to acquire land for the facility just couple months ago. Other firms still have plans to enter the sector in the UK but large offshore wind farms are currently facing political headwinds in Great Britain.

Two orders improve Vestas’ Q2 order picture somewhat

Second quarter order intake for Vestas (OMX: VWS) has been pretty good in previous years. That is why its current nearly barren announced orders table has been catching investor gaze. After two announcements today, the company has now communicated orders totalling 382 MW during Q2 2012. While the entire order book is clearly very strong and the worries have been elsewhere, Vestas like the entiry industry has continued to be under severe market pressure.

The first order announced today resulted from the frame agreement with Inner Mongolia Guibang Shengtai Investment Co. Ltd. signed last year. The customer will use Vestas MW V80 turbines in Wangequan wind park in Huitengxile grassland, Inner Mongolia, China. The 49.5 MW order includes a service & maintenance agreement. First turbines are expected to be delivered already during Q3 2012.

The second order of the day is a 55 MW from a returning Inergia S.p.A. The 21 V100-2.6 MW turbine will go for Orta Nova wind power plant in Apulia, Italy. Importantly a 15 year service and maintenance agreement is included. Delivery is expected to happen during Q4 2012. Orta Nova wind power plant will produce an estimated 123 000 MWh of electricity pe year or enough for residential consumption of 110 000 people.

Chinese firm buys Vestas tower factory

Vestas Wind Systems (OMX: VWS) has managed to find a taker for its towers factory in Varde, Denmark. Chinese Titan Wind Energy (Suzhou) Co., Ltd will be taking over the operations in a transaction that maintains most of the 120 jobs in Denmark. Titan Wind is a large wind turbine tower manufacturer and it has a long-standing business relationship as a supplier to Vestas. This agreement allows it to establish European production for both onshore and offshore wind turbine towers. Vestas meanwhile cuts its fixed costs and gets rid of a factory that would have otherwise gone under the hammer as it focuses on turbine making.

The companies see much potential for further cooperation and the Chinese side views Europe as the most promising region for offshore wind energy development. The official MoU signing will coincide with the visit of Hu Jintao in Denmark. The deal still needs to be officially approved by the Chinese authorities. That is expected to happen soon. Vestas’ share has been battling with 30 DKK level as of late, which is another multi-year low and is currently trading just below that.

Vestas keeps getting some orders

Vestas Wind Systems (OMX: VWS) was up for a change, mainly on market rumours that Vestas later confirmed on being selected the preferred supplier for five projects in South Africa totalling 297 MW. Should firm and unconditional orders materialize, Vestas will announce those. To keep things in perspective, the 2% pop could not even lift the stock above 40 DKK and it is still down nearly 40% for the year so far.

A firm order was also publicized today as Vestas landed a new customer in Guangdong Yueneng Wind Energyfor 25 V90-1.8/2.0 MW turbines to be installed in the very south of Chinese mainland in Denglou Jiao, Guangdong province. The project financing was obtained from the European Investment Bank thus foregoing the problems posed by less lending from Chinese banks as of late

Brutal quarter for Vestas, maintains expectations

Vestas Wind Systems (OMX: VWS) didn’t do any better than its competitors on Q1 2012. The company calls the performance disappointing, reflecting low level of deliveries, too high turbine costs for V112-3.0 MW and additional provisions for V90-3.0 MW.

Measured in Euro terms, first quarter revenues reached 1.1 billion. Gross profit was just positive at 12 million where as operating profit before (-204 million) and after special items (-245 million) tells a cruel story. Free cash flow was -295 million Euros, which is a bit better than last year. First quarter order intake was 1269 MW, which meant the unannounced orders were 354 MW.

According to the company, the extra warranty provision relates to 376 V90-3.0 MW gearboxes delivered by ZF Wind Power Antwerpen NV (previously Hansen Transmissions) between 2009 and 2011, which may need additional actions due to malfunctioning bearings. Vestas may be seeking for compensation from the suppliers.

Vestas said it had received inquiries from potential partners regarding the development of V164-7.0MW turbine. It is slowing the pace of development, with prototype now expected in 2014. Vestas still expects 0-4% EBIT margin, revenue of 6.5-8 billion (850 million from services and shipments of 7 GW) and a positive free cash flow. The share, which was heavily shorted going into the report, is reaching for new lows in the early going.

Vestas finds new CFO

Vestas Wind Systems A/S (OMX: VWS) said on Friday, that the company has appointed Dag Gunnar Andresen as a new CFO and a member of Executive Management starting from August 1st. He most recently held a similar position at Sweden energy company Vattenfall AB. Prior to this he has experience from the financial and industrial sector.

Senior management of the company is delighted to have attracted such a household name, whose experience also fits the company. Mr. Andresen himself said he realizes that the company needs significant tightening to return to profitability, something he is used to, and is looking forward to contributing to get the company back on track.

More Vestas buyout rumours

Danish newspaper Jyllands-Posten wrote this morning that Chinese rivals Goldwind and Sinovel have contacted corporate bankers for a possible takeover bid in Vestas Wind Systems (OMX: VWS) after the most recent plunge in the stock market value. The paper cited unnamed banker sources. The companies mentioned in the report declined comment.

The named Chinese companies are currently the second and seventh largest players in the market, Vestas still remains on top according to market share and its technology remains an attractive asset for the Chinese. The share is still trading far below book value and undoubtedly such rumours have scared some of those who were short going into the weekend. The stock is up almost 20% on heavy volume.

Novo overtakes Statoil as exchanges prepare for Easter

Nordic exchanges are heading for Easter holidays. Oslo already closed earlier today and Copenhagen will join it on the sidelines tomorrow. Stockholm will be open for half a day and only Helsinki has a normal trading day. Investors have been taking profits and a wobbly debt auction from Spain escalated the slide on Wednesday.

Generally there were very few company specific news. One tidbit is that Novo Nordisk has overtaken Statoil as the largest listed company in the Nordic countries, with both hovering around 65 billion Euro market cap. Various subsidy cuts across the world have really hit solar (Renewable Energy Corporation) and wind (Vestas, which also has had to digest other negative news) sectors.

Vestas climbs further, wins an order in Fujian

Despite the fact that Alstom's CEO cooled the sentiment that the company is interest in acquiring wind turbine maker and instead said the company looks to enter offshore products sector by developing its own product, Vestas Wind Systems A/S (OMX: VWS) has continued its short-term climb and is now trading at 66 DKK, up three percent for the day.

Today the Danish company announced it has received a 50 MW order from China Longyuan Power Group Limited (SEHK: 916), a subsidiary of China Guodian Corporation. The 25 V90-2.0 MW turbine will be installed at Qiulu wind farm near Putian, in Fujian The region has low average wind speeds with occasional heavy gusts. Delivery is scheduled for Q3 2012.

Consolidation looming in wind industry, Vestas again in focus

French engineering group Alstom appears to be looking for the best acquisition target in wind turbine making, newspaper Les Echos writes. According to it Vestas (OMX: VWS), Gamesa and REpower may be potential targets. Vestas has jumped over 5% on the heels of another strong day yesterday to reclaim 60 DKK level.

Vestas chairman Bent Carlsen told Reuters news agency that he is not aware of any interest in the company. He said he had also heard rumours of Alstom’s interest in REpower, which is Indian group Suzlon Energy’s German wind turbine unit.

Vestas annual report even worse than feared

Vestas (OMX: VWS) managed to miss even the preliminary figures announced on January 3rd. The company reported a revenue of 5.8 billion Euros on 0.7% EBIT margin for the full year in connection with its Q4 2011 numbers. Later than expected deliveries were given as the culprit. The costs that the company is bearing are also way too high.

The company admitted the year was highly disappointing but that the order intake of 7397 MW valued at 7.3 billion Euros was a positive. Chairman Bent Carlsen and Deputy Chairman Torsten Erik Rasmussen are following CFO Nørremark out of the door. Board member Freddy Frandsen will also not stand for re-election. Through all this CEO Ditlev Engel still remains.

Vestas has decided to from now on give EBIT, revenue and free cash flow guidance with a band and to also reduce the outlook parameters provided. For 2012 the company expects EBIT margin of 0-4%, revenue of 6.5-8 billion and positive free cash flow. Many commentators have already expressed doubt on the numbers. The stock has plummeted 12% so far to trade well below 60 DKK a share.

CFO takes the fall on Vestas profit warnings

Vestas Wind Systems A/S (OMX: VWS) said that its Board of Directors was given a thorough briefing on the conditions leading to profit warnings within the last few months. The company said that as a consequence of this CFO and Deputy CEO Henrik Nørremark resigns.

Vestas cut its earnings forecast two times in 2011. This has led to current management enjoying very little investor trust. The wind turbine maker is due to release its annual report and detailed 2012 guidance this morning and the markets certainly did not like CFO resigning one day ahead of the release. The stock shed nearly 3% and has now forfeited most of last week’s gains.

Vestas rallies

Vestas Wind Systems (OMX: VWS) skyrocketed up by nearly 15% on Friday. The advance was attributed to numerous factors. Markets were whispering that shorts had started to cover and of course others then jumped the party for an apparent short squeeze. Plenty of rumours have been circling as earlier this week the company even had to deny rumours of its Executive team meeting behind the CEO's back.

News from the United States that president Barack Obama’s administration has flashed some positive signs for offshore wind power must have played a role as well. The bureau in charge of ocean energy management appears to be moving ahead with offshore wind lease auctions into mid-Atlantic Coast. This would go a long way toward easing the fears of a weak 2013 for the industry in the United States as a result of certain tax breaks that seem set to expire.