Vestas Wind Systems A/S

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Company Overview

Vestas Wind Systems A/S engages in the development, manufacture, sale, and maintenance of wind technology that uses the energy of the wind to generate electricity. It offers wind turbines and wind power systems. The company also provides planning, installation, operation, and maintenance services. Vestas Wind Systems A/S has a strategic partnership with Marafeq to develop wind energy projects in Syria. It operates in Europe, the Americas, and the Asia Pacific. The company was founded in 1898 and is headquartered in Randers, Denmark. Revenues for the year 2010 rose 36%, to €6.9 billion, from nearly €5 billion in 2009, the company said. It expects revenues to hit €7 billion in 2011. Net profit rose 25% to about €156 million, up from about €125 million in 2009.

Vestas delivered 5,842 megawatts worth of wind turbines in 2010, compared to 4,764 megawatts delivered in 2009, the company said. The Global Wind Energy Council, based in Brussels, Belgium, said new wind turbine installations dropped to 35.8 gigawatts in 2010, from 38.6 gigawatts in 2009. Based on Vestas’ reported deliveries, the company’s world-wide marketshare rose to 16 percent in 2010, from 12 percent the previous year.

Key Facts

Headquarter Vestas Wind Systems A/S
Alsvej 21
8940 Randers SV
Denmark
Phone (+45) 97 30 00 00
Fax (+45) 97 30 00 01
E-mail vestas@vestas.com
Website http://www.vestas.com/
Turnover (in million €) 6,920
Financial Year End December
Number of employees 23,252


Key Financials

600*400 px

Revenue Distribution

The following table gives the geopraphical break-up of revenue distribution for the year 2010:

Geography Revenue (m Eur) % of Total Revenue
Europe & Africa 4,162 60%
Americas 1,626 23%
Asia Pacific 1,132 16%
Total 6,920 100%


Business Overview

Vestas Wind Systems A/S engages in the development, manufacture, sale, and maintenance of wind technology that uses the energy of the wind to generate electricity. It offers wind turbines and wind power systems. The company also provides planning, installation, operation, and maintenance services. Vestas Wind Systems A/S has a strategic partnership with Marafeq to develop wind energy projects in Syria. It operates in Europe, the Americas, and the Asia Pacific. The company was founded in 1898 and is headquartered in Randers, Denmark. Its product range includes land and offshore wind turbines capable of generating between 850 kilowatts and 3 megawatts as well as supervisory control and data acquisition (SCADA) products, supplying a range of monitoring and control functions, allowing the wind power plants to be remotely supervised. The Company is operational internationally through a network of subsidiaries.

To date, Vestas has installed over 41,400 wind turbines in around 70 countries on five continents. Along with this vast experience, the company has predicted that by 2020 as much as 10 per cent of the world’s electricity consumption will be generated by wind energy.

Product & Services

Vestas offers a complete portfolio of products and services to its customers which includes:

  • Wind Project Planning - plan for a reliable, successful project, delivered on time and on budget
  • Procurement - offering a broad product portfolio to offer the ideal turbines for all sites and conditions
  • Construction - co-ordinating with the customer to supply, install and balance the wind power plant according to the specific profile of the project
  • Operation and Service - work in partnership with the client to control and maintain the wind power plant to the highest possible standards
  • Power Plant Optimization - Vestas uses predictive and preventive service and maintenance techniques, to reduce down time and optimise yield for the installed Vestas turbines


Product Portfolio

Vestas has an extensive portfolio of turbines which are each suited to specific conditions and requirements. Vestas wind turbines are checked and tested at their own test centres, after which the results are verified and certified by independent organisations.

Click on the product name to view the details:

V52-850 kW V90-1.8/2.0 MW V90-3.0 MW
V60-850 kW V90-1.8/2.0 MW GridStreamer™ V90-3.0 MW Offshore
V82-1.65 MW V100-1.8 MW V112-3.0 MW
V80-2.0 MW V100-1.8 MW GridStreamer™ V112-3.0 MW Offshore
V80-2.0 MW GridStreamer™ V100-2.6 MW V164-7.0 MW Offshore


Services Portfolio

Vestas provides Active Output Management service programme, or AOM for short, to ensure the highest possible output at all times. A number of different AOM packages available based on the needs of the specific project, are listed below:

  • AOM 1000: For customers seeking maximum flexibility. With no base fee, a number of Vestas services are offered on a pay-as-you-go basis.
  • AOM 2000: A low-cost way to reduce the risk of downtime. Turbine performance is sustained through regular maintenance, with the option of additional maintenance items.
  • AOM 3000: For customers willing to share the risk factor. A complete field service package including parts (apart from main components) and labor is accessible to customers with more risk tolerance. Turbine reliability is maximised through expert scheduled and unscheduled maintenance.
  • AOM 4000: A complete package to maximise uptime and performance. A complete package including everything necessary (main components and material) to maximise uptime and performance. The service contract covers periods up to 10 years, suitable for customers who want the traditional time-based availability guarantee – of up to 97%. These high expectations are formalised through liquidated damages and bonus clauses in the contract.
  • AOM 5000: A complete package to ensure minimised lost production. A complete package including everything necessary to maximise output but with further aligned incentives. An energy based availability guarantee is offered that aligns service and maintenance execution with low wind periods. The service contract covers periods up to 10 years, and energy based guarantees up to 97% (subject to site evaluation). These high expectations are formalised through liquidated damages and bonus clauses in the contract.


Geographic Presence

Vestas has delivered 5,842 MW in 66 countries of the world across different continents:

  • Europe and Africa - 3,111 MW
  • Americas - 1,482 MW
  • Asia-Pacific - 1,249 MW


The following table provides the detailed presence of Vestas in various countries:

Country/Region Number MW Country/Region Number MW Country/Region Number MW
Argentina 19 11,8 Germany 5,879 7,405.13 Norway 27 15,88
Aruba 10 30 Greece 698 944.32 Peru 1 0,25
Australia 554 1060,75 Hungary 49 105.45 Philippines 20 33
Austria 224 386,56 India 4,231 2,434.59 Poland 204 422,625
Azerbaijan 2 1,7 Iran 37 16,38 Portugal 347 628,9
Belgium 120 274,67 Israel 3 0,455 Republic of Ireland 546 555,90
Brazil 125 204,43 Italy 2,235 2,485.35 Romania 98 271,66
Bulgaria 110 292,2 Jamaica 33 38.93 Russia 3 1,1
Canada 1,021 1683,10 Japan 379 509,98 Slovakia 4 2,64
Cape Verde 9 2,55 Jordan 5 1,125 South Africa 3 4.21
Caribbean Islands 2 0,2 Kenya 6 5,1 South Korea 104 166,485
Chile 64 116,68 Latvia 1 0,85 Spain 2,696 3,587.86
China 2,615 2,964,05 Lithuania 6 18 Sri Lanka 5 3
Costa Rica 71 50,55 Luxemburg 13 9,4 Sweden 1,012 1,117.63
Croatia 21 47,95 Malaysia 1 0,15 Switzerland 17 24,56
Cuba 4 3,8 Mauritius 1 0,1 Taiwan 50 86,1
Cyprus 41 82 Mexico 56 103.13 Thailand 1 0,15
Czech Republic 44 64,47 Morocco 84 50,4 Turkey 139 375.91
Denmark 4,934 2,564.56 Netherlands 1,280 1,506.35 USA 11,026 8,116.31
Egypt 124 79,075 New Caledonia 20 4,5 United Arabian Emirates 1 0,85
Finland 38 18,45 New Zealand 219 309,96 United Kingdom 1,137 1,674.95
France 586 1,104.95 North Korea 2 0,18 Uruguay 15 30


Organizational Structure

  • Vestas has 14 business units, all reporting directly to the Executive Management.
  • The presidents of the individual business units are responsible for the general day-to-day management of their respective areas of responsibility.
  • Each unit has a Board of directors that holds meetings at least four times a year. Vestas’ Executive Management is a member of the business units’ Boards, thus ensuring close dialogue with the individual units.
  • The Government coordinates production and sales – and prioritises development efforts so that the Group can implement the strategy defined by the Board of Directors in collaboration with the Executive Management. The Vestas Government holds weekly government meetings.

A schematic representation of the company structure is given below:

Vestas2.jpg


To view the details of an individual business unit, please click on the business unit name:

Vestas Americas Vestas People & Culture
Vestas Asia Pacific Vestas Technology R&D
Vestas Central Europe Vestas Spare Parts & Repair
Vestas China Vestas Blades
Vestas Mediterranean Vestas Control Systems
Vestas Northern Europe Vestas Nacelles
Vestas Offshore Vestas Towers


Employee Distribution

  • Vestas recruit employees under the “People before megawatt” principle, because the costs of well-educated excess capacity are lower than the costs of remedying faults due to a rushed staff inflow caused by strong MW growth.
  • The 23,252 employees have an average seniority of 3 years and 11 months.
  • Key priority areas identified are training and, in particular, retention of new and existing employees as around 22% of the employees are having less than one year's seniority.
  • Due to enhanced efficiency, improved turbine performance and economies of scale, going forward, Vestas expects its headcount to rise at a lower rate than its business volume.
  • A prerequisite for sustaining progress is for Vestas to become a more international business with a much higher number of non-Danish employees in management positions. Furthermore, Vestas aims to have more women executives.
  • In addition, Vestas also aims to have many nationalities at all locations in order to create a truly global business, which also has extensive local insight and understanding.


The following table provides the employee distribution of Vestas across geographies:

Region/Department Production Sales R&D Others Total
Europe & Africa 7,579 4,509 1,515 1,522 15,125
Americas 1,479 1,278 189 0 2,946
Asia-Pacific 2,475 2,004 573 129 5,181
Total 11,533 7,791 2,277 1,651 23,252


A comparative graph of emplyee distribution by function for 2006 and 2010 is given below:

700*300 px


Mergers & Acquisitions

Acquisitions Stakes Divestitures

  • WEIER Electric-Certain Assets (Oct 2005)
  • NEG Micon A/S (Mar 2004)
  • Windcast Group A/S (Oct 2002)

  • C&C Energy Srl (Jan 2011)
  • Gamesa Eolica SA (GE) (July 2001)
  • Cotas Computer Technology A/S (April 1999)
  • Volund Staalskorstene (Sep 1995)
  • Volund Varmeteknik (Aug 1995)


Sources: Analyst Reports

Order Book

600*150 px


The following table provides the Order Book summary for Vestas from 2007 to 2010:

Particulars 2010 2009 2008 2007
Order Value (bnEUR) 8.6 3.2 6.4 5.5
Order intake (MW) 8,673 3,072 6,019 5,613
Produced and shipped (MW) 4,057 6,131 6,160 4,974
Deliveries (MW) 5,842 4,764 5,580 4,502


Sources: Analyst Reports, Factiva News Articles

Market Overview

Market Share

The following graph shows the market share of Vestas from 2004 to 2010

Vestas4.jpg


Reasons for decrease in market share:

  • Emerging competitors in the wind energy space.
  • Stiff competition for Vestas in China – Sinovel (21,9%), Goldwind (17,7%), and Dongfang (16,4%) - which are all of Chinese origin. China‘s main three suppliers hold about 60% stake in the home market.
  • GE is providing a stiff competition in the american market.
  • The German market, being one of the core countries in Vestas strategy, is showing signs of saturation.


Track record by Turbine Type

Turbine Type Installed in 2010 Accumulated Installed
Number MW Number MW
V52-850 kW 340 289 3,764 3,199
V60-850 kW 15 13 15 13
V80-1.8 MW 0 0 1,016 1,829
V80-2.0 MW 267 534 2,981 5,962
V82-1.5 MW 0 0 213 320
V82-1.65 MW 273 450 2,883 4,757
V90-1.8 MW 269 484 572 1,029
V90-2.0 MW 763 1,527 3,286 6,544
V90-3.0 MW 834 2,502 2,170 6,510
V100-1.8 MW 20 36 20 36
V112-3.0 MW 2 6 2 6
Other 1 1 26,511 13,909
Total 2,784 5,842 43,433 44,114



SWOT Analysis

Strengths Weaknesses

  • Customer loyalty and satisfaction
  • Strong global market position
  • Attract and retain skilled workforce
  • Strong R&D
  • High quality product and service offering

  • Relies much on European market
  • Long delivery time of turbines
  • Communication process with customers
Opportunities Threats

  • Combine hydropower and wind power
  • Enter into emerging markets
  • Develop offshore technology

  • Macro conditions in US market
  • Nature of projects
  • Financial risk, credit risk and market risk


Recent Developments

  • Vestas Wind Systems A/S Receives 102 MW Order in California, USA
Vestas Wind Systems A/S has received a Supply-only firm and unconditional order for 34 V90-3.0 MW wind turbines for California, USA, from Brookfield Renewable Power and Coram California Development Management, LLC. Delivery is scheduled for second half of 2011 and commissioning is expected by late 2011.


  • Vestas Announces 49-MW Order, 250-MW Frame Deal in China
Vestas Wind Systems A/S announced that it signed a 49-MW contract for delivery of V80 turbines and a frame agreement for another 250 MW with Chinese Inner Mongolia Guibang Shengtai Investment Co Ltd. (GSI). The turbines will be installed in a project in Huitengxile in the Chinese Inner Mongolia autonomous region. They are due for delivery in the third quarter of 2011. Vestas will deliver the turbines and supervise their installation and commissioning. It will as well provide a VestasOnline Business SCADA solution and service and maintenance.


  • Vestas Wind Systems A/S Reports Earnings Results for the First Quarter of 2011; Provides Earnings Guidance for the First Half Year of 2011
Vestas Wind Systems A/S reported earnings results for the first quarter of 2011. For the quarter, the company reported revenue of EUR 1,060 million, an increase of 25% relative to the first quarter of 2010, and as announced realized a loss. The EBIT margin fell from 4.6% to 6.5%. The development confirms that revenue and earnings may show major quarter-on-quarter fluctuations depending on the capacity utilization and the type of projects handed over. The free cash flow was improved compared to the first quarter of 2010 by EUR 116 million to EUR 431 million. The first half year of 2011 is expected to break even against an EBIT loss of EUR 219 million during the first half year of 2010.


Key Executives

Vestas has 14 business units, all reporting directly to the Executive Management. The presidents of the individual business units are responsible for the general day-to-day management of their respective areas of responsibility.

Executive Designation
Ditlev Engel President and CEO, Vestas Wind Systems A/S
Henrik Nørremark Executive Vice President and CFO, Vestas Wind Systems A/S
Anders Søe-Jensen President, Vestas Offshore, Denmark
Bjarne Ravn Sørensen President, Vestas Control Systems, Denmark
Finn Strøm Madsen President, Vestas Technology R&D, Denmark
Hans Jørn Rieks President, Vestas Central Europe, Germany
Jens Tommerup President, Vestas China, China
Juan Araluce President, Vestas Mediterranean, Spain
Klaus Steen Mortensen President, Vestas Northern Europe, Sweden
Knud Bjarne Hansen President, Vestas Towers, Denmark
Martha Wyrsch President, Vestas Americas, USA
Ole Borup Jakobsen President, Vestas Blades, Denmark
Phil Jones President, Vestas Spare Parts & Repair, Denmark
Roald Steen Jakobsen President, Vestas People & Culture, Denmark
Sean Sutton President, Vestas Asia Pacific, Singapore
Søren Husted President, Vestas Nacelles, Denmark