Vestas Wind Systems A/S is a company that many U.S.-based green and renewable energy investors may either not know at all or only know by name.  But the Danish company is essentially the leader in wind energy and has projects globally with a 20% market share and some 38,000 wind turbines installed.  The company has reported a 58% increase in revenues for its first quarter and has announced that it would be increasing its share capital by about 9.99% via the sale of a private placement of shares.  But to show the weakness in the economy and presumably in the slowing trend of alternative energy orders with lower conventional energy prices today, the company has also announced that it is cutting about 1,900 jobs.  Aren’t green jobs the whole future of the growth prospects?

On the income side, Vestas generated first-quarter revenue of EUR 1.105 billion, an increase of 58% from the same period in 2008.  The wind energy leader also said that its order backlog of firm and unconditional orders was EUR 4.9 billion at 31 March 2009.  Its report EBIT rose 124% to EUR 76 million, and it lifted its EBIT margin from 4.9% to 6.9%. The company’s net working capital stood at 8% of expected annual revenue rather than the 2% reported in the same period in 2008.

Full-year expectations for 2009 are still for an EBIT margin of 11% to 13% on revenue of EUR 7.2 billion. The company’s total undrawn financial facilities amounted to EUR 850 million and it has continued expansion in the U.S. and China.

But here is where this shows some peaking out.  Vestas said that its capacity will be reduced in Northern Europe “as demand in this area at the moment does not meet expectations.”  That is where the 1,900 layoffs come into play.  This affects employees in the production units in Northern Europe, primarily in Denmark and England.  The company’s investments in property, plant and equipment are being reduced by EUR 200 million to EUR 1 billion.

Vestas also noted that theBritish Government’s commitment  on April 21 regarding “massive investments in wind power and higher tariffs” will have a positive influence on Vestas’ possibilities of producing blades in Great Britain.  That sounds great, but the layoffs might not come with such a warm welcome from England (nor from Denmark for that matter).

Vestas will issue up to 18,500,000 new shares in a private placement.  Vestas said that the funds will be used to further strengthen its capital resources, especially to position Vestas to quickly and efficiently exploit the opportunities offered by the credit crisis in a technology based industry.

The company’s market cap from its own site lists it as being 8.429 billion Euros (EUR), and that translates to right at $11 billion US.

The environment has definitely softened for many leaders and tier-2 and tier-3 players in alternative and renewable energy.  It turns out these in effect are in many cases no different than being leveraged energy companies if you have followed the stocks of these global leaders and overlaid them against the stocks of major old dirty energy companies.  Layoffs in this sector only highlight the risks in many new trends, even if they are part of the solution to fight global warming.

JON C. OGG

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