Shareholders will require answers at Vestas AGM

The annual general meeting of Vestas at the end of this month should make for a lively affair.

Shareholders of the beleagured Danish wind turbine manufacturer will want to know if, how and why 2012 is not going to be the car crash that 2011 was for the company.

Vestas has suffered a perfect storm of business disaster in the last six months: production delays that led to profit warnings; then worse-than-expected losses, leading to 10 per cent of its workforce in Europe being axed and the threat of more to come in the US. All of which led to the loss of its chairman, chief financial officer and a list of division heads almost too long to list.

Vestas president Ditlev Engel had admitted the company has a “credibility problem” that is “not undeserved”.

à‚ The company is gamely trying to talk up its good news stories: in the last week it has bagged an 82 MW order in Poland, a 102 MW deal in the US, appointed a new general manager in Turkey and said business is growing in Australia.

But for many financial analysts Vestas has become a business byword for reaching too high, too far and too soon.

In the last few days, the UK’s Financial Times ran a comment piece under the headline ‘Vestas a victim of its own propoganda’.

It suggested that Vestas was blinded to the realities of the way the turbine market was turning because it essentially believed its own hype.

“With world demand for new turbines set to weaken after 2008, it made little sense for Vestas to persist with heavy investments in manufacturing capacity and R&D personnel ” yet this is exactly what Vestas did,” said the FT.

Why did the company pursue this strategy? Because it “swallowed its own propaganda to the effect that someone would always pay top dollar for a wind turbine”, suggested the FT. à‚ It added that the company “could not resist taking advantage of its temporarily stratospheric share price” and concluded that “Vestas may one day pay a high price” for these errors.

Making sure that “high price” does not continue to spiral will be top of the agenda at the AGM in Denmark on March 29.

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