Vestas announced the cuts as its third quarter (Q3) results were announced.
Net profit fell 23.6% to €126 million and EBIT fell 24% to €185m. Revenues decreased 5% to €1722m and shipments of wind turbines dipped 27% to 719 wind turbines.
At the beginning of 2010, Vestas decided to retain substantial excess capacity in Europe expecting increased wind turbine demand in 2010 and 2011 – however, as growth is not living up to the wind turbine manufacturer’s expectation, Vestas says it is “compelled to adjust its capacity in Europe.”
Vestas says it has been affected by, amongst other things, increases in component prices and sales in Europe being hampered by national budget deficits.
Closing wind turbine factories
The Danish company plans to close “a number of factories, primarily in Denmark, where costs are highest.” Vestas will also make cuts in administration.
Vestas wind turbine blade production facility in Nakskov, Denmark, will be closed down, resulting in 430 jobs being lost. Furthermore, Vestas Nacelles’ activities in Skagen (130 jobs), Viborg (343 jobs) and Lidköping in Sweden (102) face closures. Vestas Towers’ activities in Rudkøking, Denmark (235 jobs) will also go.
Vestas says due to the planned cuts, it can retain its expectations for the full year 2010 as announced at the end of Q2. However, investment will now remain below €900m as opposed to the previously announced €1 billion. Revenue is still expected to reach €6bn with an order intake of 8-9 GW.
For 2011, Vestas expects a fall in order intake to 7-8 GW. Cash flows from operating activities after changes in working capital are as a minimum expected to exceed investments in property, plants and equipment of around €400m and investments in intangible assets of around €250m.