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Issue #588

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2014 Media Kit
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Vestas sees room to grow in China, India and Brazil

By: | at 03:20 PM | International Trade  

Denmark’s Vestas , the world’s biggest wind turbine maker, is targeting growth in China, India and Brazil as it battles back from years of losses caused by overcapacity, increasing competition and falling demand.

Vestas has shed more than 5,000 jobs, closed plants and sold unprofitable businesses in a restructuring and is now seeking growth opportunities in three major emerging economies, which account for more than half of global wind system demand. “While Vestas has a strong position in new markets and mature markets, there is room for improvement in China, India and Brazil,” Chief Sales Officer Juan Araluce said at a day of briefings for analysts and investors on Thursday.

Araluce said his sales push was enhanced by increased confidence in the company among its customers.

“We have improved, reputation (is) back on track, satisfaction generally stable, 85 percent of respondents call Vestas a top-two supplier,” he said.

Vestas shares lost 96 percent of their value in the wake of the financial crisis, as subsidies for green energy dried up and competition grew, but have rebounded sharply in the last 18 months. Year-to-date they are up 83 percent, though they remain far off a 2008 record of 700 crowns.

They were up 1.6 percent at 292 crowns by 1108 GMT.

Reuters data shows the stock trading on 26 times this year’s forecast earnings, a 32 percent premium to its peer group.

The company, which last year posted its third straight annual loss, also said it was keeping unchanged its guidance for this year’s results, having made an unexpected return to profit in the first quarter.

The company repeated its expectations for 2014 revenue of at least 6 billion euros ($8.2 billion) and said it still predicted an operating profit margin before special items of at least 5 percent and free cash flow of at least 300 million euros.

Chief Executive Anders Runevad told Reuters the company was not changing its indications for the year as a whole, but declined to elaborate on its performance in April through June.

“We will come back to that when we release the report for the second quarter,” Runevad said.

“The most important focus ... is to execute on our plan,” he said. “What we represent here is the long-term plan - three to five years. We have done a quarter and we have a good platform to stand on, but there’s a lot of work that remains.” (Reuters)