The Ups and Downs in the ”Green” industry

Yet again Vestas have promised more than they can deliver and the market has promptly punished the company with a massive fall in shareprice. It would seem that the management of Vestas with Ditlev Engel in front can’t get it right or as a minimum they are just too optimistic for their own good.

But why is it so hard to predict how Vestas performs even for the management of the company? One guess could be that the market for wind turbines is extremely versatile. From 2006 to 2008 there seemed to be a fairly stable period with a slow but steady increase in order intake then in 2009 the market seemed to bottom out as the talks about CO2 quotas went on and then in 2010 Vestas got a few but very big orders.

One of the reasons why Vestas is so vulnerary is that they in contrast to other plays like GE and Siemens only have one product line. Other companies have a diverse portfolio that they are able to market so if they lose something on one product line they can make up some of the looses in another. This is also apparent in their stock have experienced a close to steady positive development for the past year.

I would not write of Vestas for now but they do need to get their communication to the market under control or at least be more open about their prospects. Investors get jumpy when they are confronted with information that they did not expect, both in a positive and negative sense. In a very volatile market as the wind energy market is, there is no substitute for timely valid and real hard facts instead of dreams and hopes for the future. If the CEO is to remain at Vestas he needs to provide the market with more than his dreams.

The biggest wind turbine ever

A Vestas Wind Turbine

Image via Wikipedia

Vestas winds systems announced the construction of a new mega wind turbine for offshore opperations. The mill will produce some 7 MW of power enough to power a small town!

In the past I and other have criticised Vestas for not delivering on the promises and I’m kind of reluctant to put my chips on this one but it does sound real good. Both in terms of the energy produced but also in relation to the economics of offshore windmill operations.

If the company is able to pull this one of they will be the number one green energy manufacturer of the world. Well i’m for one is glad that I bought stock in Vestas.

Enjoy the videos ;O)

No Bonus for Vestas Wind Systems Management

Vestas wind turbine, Dithmarschen.

Image via Wikipedia

Vestas wind system have in the past have had real problems with customer satisfaction. The main problems have been with the gear system in the wind turbines and in the past they have been the source of real challenges for Vestas customers.    

In the just released annual report the company reported a customer satisfaction of 64 but this is not good enough when the target was for 70. Vestas’ customer satisfaction, not deliver the expected growth in 2010 and therefore contributed to an absent bonus for Vestas management. 

Vestas in 2010 conducted a customer satisfaction survey in which 986 persons from 348 customers answered the Danish wind giant. And the answers were not positive enough. 

Customer Satisfaction Index was ended in the index 64 and thus unchanged from 2009, where satisfaction rose by 12 index points. 

Five sales business units went forward and two went back, said Vestas annual report. Now reads the target for 2011 at an increase in customer satisfaction index to 72 and a further increase to “at least 75”. 

“It is on level with the best in the world,” says Vestas. 

The bonus for 2011

As the targets that triggered the bonuses for 2010 was not met by Vestas management they will have to wait another year and try again.
The customer satisfaction index of 72 counts 20 per cent of the corporate bonus target. In addition, counts an operating margin of 8.4% counts for 35%, a free cash flow of 200 million euro 30% and a turnover of 7 billion euro 15%. 

In 2009 Vestas managed to raise customer satisfaction which was mainly attributed to better performing mills, an improvement in the cooperation with customers, better internal process management and launching of new products and services. 

“All actions that are helping to lay the foundations for the necessary growth in turnover and profitability in the coming years,” said Vestas.