Frances Schwartzkopff and Gelu Sulugiuc, Bloomberg
October 08, 2012 | 0 Comments
Vestas Wind Systems A/S, the world's biggest wind turbine maker, topped gainers in Copenhagen as Danish Prime Minister Helle Thorning-Schmidt said tough economic conditions shouldn't deter investment in renewable energy.
Vestas rose as much as 2.9 percent, the biggest increase of stocks in the benchmark OMX Copenhagen Index. Shares in Aarhus, Denmark-based Vestas gained as much as 1.1 kroner and rose 0.59 krone, or 1.6 percent, to 37.91 kroner at 11:01 a.m. local time.
“Even though we’re in an economic crisis, this is the time to invest in green jobs,” Thorning-Schmidt said in a Bloomberg Television interview today. Dependency on oil will be “extremely expensive” in the future, and “that is why we’re turning to be more dependent on wind energy and solar energy.”
Vestas faces declining demand in Europe and the U.S. and even higher sales in emerging markets won’t be enough to make up for lost revenue in the company’s main markets, Chief Sales Officer Juan Araluce said Oct. 3. The turbine maker is firing about 16 percent of its employees worldwide and consolidating its U.S. research and production in Brighton, Colorado. Vestas will also close similar facilities in Singapore and Denmark as part of a global push to trim its operations.
Vestas Chief Executive Officer Ditlev Engel said the company is looking to Asia for growth and sees “good opportunities” in China, South Korea and Japan. Vestas is also sticking to its guidance to deliver a positive free cash flow this year, Engel said in an interview in Copenhagen today.
The company’s efforts may trigger a gain in the shares, Michael Friis, analyst at Alm. Brand Markets, said in an Oct. 5 note following Vestas’ capital markets day. Friis upgraded his recommendation to buy from neutral and raised his price target to 50 kroner from 45 kroner.
“In the short term there are many uncertainties that can hit Vestas shares,” Friis said. “We see, though, that the clear focus on further cost-cutting to asset-light will more than match these.”
Copyright 2012 Bloomberg
Lead image: Wind turbine via Shutterstock