Vestas - High Costs Limit Growth
Wind power giant Vestas must lower costs to maintain its high-growth path.

Danish company Vestas was founded in 1945 as a manufacturer of household appliances. It produced its first wind turbines in 1979, and is today the world’s largest manufacturer of these. It is listed on the Copenhagen Stock Exchange, with ADRs available in the US.

Latest Business Results (September 2007, Third Quarter)

Vestas achieved an excellent result, with sales up 37% from the September 2006 quarter to EUR 1.15 billion, EBIT up 155% to EUR 102 million and after-tax profit surging 267% to EUR 66 million. Healthy demand, along with higher sales prices and efficiency improvements, were key factors. European business was responsible for 52% of sales revenues, with America 37% and Asia-Pacific 11%.

Outlook

Vestas has grown hugely thanks to its strength in Europe. However, as that market matures the company’s growth could slow. Merrill Lynch forecasts that until 2011 it will achieve just single-digit annual growth, and that its global market share could tumble from 34% in 2006 to under 20%. Since 2005 the company has been working to lower its costs, and it it is investing heavily in production facilities in China and the US. Its own forecast is for revenues of about EUR 4.5 billion in 2007, a 15% rise from the previous year, with a jump to around EUR 5.7 billion in 2008.

January 12th, 2008

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Vestas - High Costs Limit Growth Wind power giant Vestas must lower costs to maintain its high-growth path.

Vestas - High Costs Limit Growth
Wind power giant Vestas must lower costs to maintain its high-growth path.