By Richard Milne, Nordic Correspondent
Vestas is raising fresh capital as the Danish wind turbine maker reported
its first quarterly profit in two-and-a-half years, wrapping up a
restructuring that rescued it from the brink of financial disaster.
The world’s second-largest maker of turbines will issue 20m new shares –
equivalent to 9.99 per cent of its existing capital – as it finally makes a
long-predicted move to shore up its balance sheet.
The move came as it released its results a day early, saying it had made a
net profit of €218m in the fourth quarter compared with a loss of €618m a
year earlier. Analysts had forecast a net profit of €159m, according to
Bloomberg estimates.
Vestas was caught out like all of the wind industry by falling subsidies
and rising competition in the past few years but was the most prominent
victim as management issues and ill-timed expansion exacerbated its problems.
But following a brush with financial collapse as it breached its banking
covenants, the Danish group has nursed itself back to health by slashing a
third of its workforce, outsourcing much of its production, and entering
into a joint venture with Mitsubishi Heavy Industries in offshore turbines.
Traditionally the strongest quarter of the year, the fourth quarter
provided the strongest evidence yet of Vestas’ turnround. Its operating
margin before special items was 10.2 per cent, up by 4 percentage points on
a year earlier. Free cash flow hit €816m. That allowed it to beat its main
financial target for the year of free cash flow of €1bn.
For 2013 as a whole, Vestas recorded a 16 per cent decline in revenues to
€6.1bn, and an increase in its operating margin before special items of 3.4
percentage points to 3.5 per cent.
The Danish group said it expected an operating margin of at least 5 per
cent, free cash flow to be a minimum of €300m, and revenues of more than €6bn.
Anders Runevad, chief executive, hailed the strong fourth-quarter results
and added: “The satisfactory completion of the two-year turnround is at
least as important as it creates a solid starting point for the future
strategy for Vestas, where Vestas will continue to focus on profitable growth.”
Vestas said it was raising new capital to give it greater financial
flexibility and stability. It added it thought the stronger balance sheet
would give it “additional business opportunities” as well.
Rothschild advised Vestas, while DNB, HSBC, Nordea and SEB are acting as
joint global co-ordinators and bookrunners for the capital increase.
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