Company Results

By its own admission 2010 was a tough year for Vestas. Two people employed by the company’s business partners were killed in industrial accidents, a profit warning was issued and almost 3000 of its staff were made redundant in response to a shaifting global market. In addition, a change in accounting procedures caused uncertainty, the outlook for 2011 was a disappointment, and its share price was down by almost 50% in the warmest year on record for more than 100 years.

The company made no bones about its financial shortcomings in 2010, with the details laid bare in the opening statement of its annual report. (For more on Vestas’ announcement of staff layoffs see here.

So, were there any positives in 2010 and what of the outlook for 2011? Vestas certainly believes there were positives. It is on track for 2011, it claims. Its customers and their banks still ‘appreciate’ their products; its order intake was the greatest ever; it implemented a regionalisation programme; and retained and recruited staff; and has emerged from the credit crisis with reduced debt despite a hefty investment programme. The green wave, it says, rolls on.

The company made two key decisions which its says helped it secure its place at the top of the pecking order of wind turbine manufacturers. First was the regionalisation of its production and second was its dedication to quality, research and technology development. And according to Bent Erik Carlsen: ‘The elimination race after the credit crisis has increased the value of local presence and quality of product and services. This is to Vestas’ benefit.’

Vestas’ year-end revenue and EBIT

Its numbers reveal that 2010 saw the company’s revenue increase to €6.92 billion for the full year, up from 2009’s €5.08 billion. Gross profit was also up, at €1.175 billion from the previous year’s €836 million, while operating profit for 2010 was €310 million, up from 2009’s €251 million.

Its intake of firm and unconditional order in 2010 rose to 8673 MW from 3072 MW in 2009. In terms of value, the increase amounted to €5.4 billion, for a total of €8.62 billion from 2009’s €3.2 billion. During the course of the year Vestas produced and shipped 2025 wind turbines with a combined capacity of 4057 MW, down from the 3320 turbines (6131 MW) in 2009. The decline, it said, was due to a low number of orders in 2009. In total, 2010 saw 582 MW of turbine capacity handed over to customers.

In its outlook, it said its firm and unconditional orderbook for 2011 is expected to be in the region of 7000-8000 MW. The bulk of its orders are also expected to include short-term or longer-term service contracts with varying scope. Shipments, it said, are expected to rise from 4057 MW in 2010 to 6000 MW in 2011, so by the end of 2011, Vestas is expected to have installed around 50 GW.

It also said it expects to achieve an EBIT margin of 7% and revenue of €7 billion in 2011, including service revenue, which is expected to hit €700 million for an EBIT margin of 15%. Revenue and earnings are expected to be fairly evenly distributed between the first and second half of the year, the company says, though for the first quarter, Vestas forecasts a minor loss.


Swedish government-owned energy group Vattenfall saw it 2010 net sales rise to SEK213.6 billion ($33.7 billion) from the previous year’s SEK205.4 billion ($32.5). Operating profit for the year rose 6.9% to SEK29.85 billion ($4.7 billion) from 2009’s SEK27.94 million ($4.4 million). Its after-tax profit was down 2% to SEK13,185 million ($2083 billion) while its operating profit for the fourth quarter dipped 12.8% to SEK4.95 billion ($782 million).

Commenting on the company’s results, Vattenfall’s chief executive officer Øystein Løseth observed: ‘I am pleased to be able to report an improved operating profit for 2010, despite large one-off costs.’ Løseth added: ‘We have increased our production volumes and lowered our operating and maintenance expenses, and with our new business-led organisation I see great potential for further efficiency improvement’.

Løseth continued to explain the company’s strategy under his leadership: ‘The market outlook for energy companies continues to be challenging, with pressure on margins and weak growth in demand. It is therefore of utmost importance that we increase the company’s efficiency and concentrate our business to areas in which we have… advantages and have, or could have, a strong position.’

According to the company, the improvement in operating profit was mainly attributed to higher production volumes, lower operating and maintenance expenses, lower costs for sales and administration, and an improved result for the trading operations, said the company.

Average lower prices resulted in a negative effect on consolidated operating profit, by approximately SEK5.5 billion ($869 million). Higher prices attained in its Nordic operations were offset by lower ones in continental Europe. A large share of Vattenfall’s generation is hedged through contracts previously entered into in the forward market. Currency movements had a negative effect on operating profit by SEK700 million ($110 million) as a result of the stronger Swedish krona.

Vattenfall’s total electricity generation over the year increased by 8.6% to 172.5 TWh (up from the previous year’s 158.9 TWh). Electricity generation volumes increased for all types of energy.

Its return on equity was 10.0% (9.5%) and the return on net assets was 9.1% (10.0%). Vattenfall’s long-term rate of return on equity is 15% over a business cycle (5-7 years). Its target return on net assets is 11%.

EDF Energies Nouvelles

For the fifth consecutive year since its IPO, EDF Energies Nouvelles (EDF-EN) met all of its commitments, according to board chairman Paris Mouratoglou on the publication of the company’s full-year 2010 results.

‘All our businesses contributed to this performance, providing further evidence of the strength of the group’s business model and the wisdom of its strategic decisions. The solar photovoltaic segment has genuinely accelerated, putting us ahead of our objectives for 2012,’ he said.

‘With the ramp-up in construction starts in the wind energy segment, which is set to continue in 2011, and our continuing momentum in the solar segment, we are entering the final stretch in the race to meet our 2012 objectives and are already looking beyond 2012,’ he added.

As of the end-December 2010, full-year were €1.57 billion, representing an increase of 4.1% compared with the previous year. Revenues from its generation business came to €461.1 million, representing an increase of 27.3% compared with figures for the 31 December 2009 and the total output reached 6133 GWh.

Growth was driven by wind-generated electricity, which was boosted by a full-year contribution from the 106 MW Hoosier farm in the US and by those commissioned in Europe in 2010 (representing an increase of 247 MW). Even so, growth in wind was curbed by a modest effect in Europe, owing to the timing of wind project commissionings.

Solar-generated electricity also made a strong contribution to growth in the generation business, with revenues quadrupling compared with the previous year owing to the number of facilities commissioned in Europe and Canada (an increase of 186.2 MWp gross) during 2010.

The group’s gross installed capacity as of 31 December came to 3422.6 MW, up 477.2 MW in comparison with 31 December 2009. Net capacity stood at 2663.2 MW, representing an increase of 406.2 MW compared with year-end 2009. At 31 December 2010, the group had 1089.1 MW gross (672 MW net) under construction, which represents a record level. Net capacity in service or under construction stood at 3335.2 MW in line with the objective of 4200 MW at year-end 2012.

Total wind capacity installed stood at 2922.9 MW, up 272.9 MW compared with 2009 while installed solar capacity more than tripled over 2010 to reach 267.1 MWp, representing a rise of 186.2 MWp. Net capacity in service or under construction reached 334.5 MWp.


At Siemen’s energy sector, new orders on the first quarter climbed 27% and revenue 14% with the surge in new orders driven primarily by its fossil power generation division and the increase in revenue growth especially by its renewable energy division.

In strengthening global energy markets, the company’s energy sector delivered double-digit increases in orders and revenue compared to the first quarter a year earlier, and profit rose 7%, to €826 million, driven by a strong earnings increase at its fossil power generation division. Sector profit for the quarter includes higher expenses for R&D, marketing and selling associated with growth, particularly at its renewable energy division.

Revenue rose 14% year-over-year, to €6.378 billion, on strong conversion of orders from the backlog. All divisions contributed to the increase, and revenue also rose in all three regions. Orders grew in all three regions, particularly in emerging markets in Asia, Australia. Currency translation effects accounted for 6% of revenue growth and 7% of order growth.

Siemens’ renewable energy division posted a strong rise in revenue, to €868 million, on conversion of large orders from prior periods. This helped lift first-quarter profit above the prior-year level despite significantly higher expenses for R&D, marketing and selling associated with expansion of its wind business and integration of its solar thermal business, which are expected to continue to hold back profitability in the coming quarter.

Orders came in above revenue, but well below the prior-year quarter which included a higher volume from large orders. During the quarter, the company acquired a stake in A2SEA A/S, a supplier of offshore wind-farm installation services. This compared with its fossil division which reached a new high in profit, at €473 million.

The global market environment for fossil power generation showed continued signs of recovery, the company said and the division recorded a higher volume from large orders compared to the prior-year period, all three regions reported strong growth, and orders more than doubled in emerging markets on a global basis. As a result, first-quarter orders for the division came in at €3.916 billion, well above the prior-year level.

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Renewable Energy World's content team members help deliver the most comprehensive news coverage of the renewable energy industries. Based in the U.S., the UK, and South Africa, the team is comprised of editors from Clarion Energy's myriad of publications that cover the global energy industry.

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