Vestas reports slide in profits
Danish wind turbine manufacturer Vestas has reported a drop in profits for the second quarter of the year as a result of falling orders and controversial job cuts.
The company reported that pre-tax profits for the period fell 15 per cent year-on-year to €78m (£67m), despite sales increasing 11 per cent to over €1.2bn.
The fall in profits was attributed to lower than anticipated orders – which saw 12 per cent fewer turbines shipped during the second quarter than during the same quarter a year ago – and costs arising from the decision to make more than 1,100 Danish and 425 UK employees redundant.
The decision to lay off staff in the UK prompted a high-profile sit-in protest at the company's factory on the Isle of Wight, which ended earlier this month after 19 days.
Vestas had said that it was facing over capacity in Northern Europe and was looking to shift manufacturing to more cost-effective locations in China and the US – an argument reinforced in part by today's results.
Writing in the quarterly report, Vestas president and chief executive Ditlev Engel and chairman Bent Erik Carlsen said that order levels had been impacted by the credit crunch.
"Many customers have been unable to finance scheduled projects either due to increasing funding costs or an actual lack of funding," they said.
"Moreover, some of the banks that were previously key players in the wind turbine market are no longer active."
However, the company said there were signs the market was picking up and that it would retain its financial expectations for the year, predicting that sales will rise 20 per cent year-on-year to €7.2bn, while the pre-tax profit margin is expected to reach between 11 and 13 per cent.
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