Vestas shares plunge on downgrade

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Shares in Vestas, the world’s largest wind turbine manufacturer, plunged almost 14 per cent on Thursday as the Danish company downgraded its full-year forecast because of a severe shortage of key components, a sluggish output rate and budget overshoots in the US market.

The revised 2005 forecast – of a negative EBIT margin of 3 per cent instead of a positive 4 per cent - came despite surging demand for windpower.

However, Vestas also said this demand would underpin revenues and it firmed up its 2005 sales forecast to €3.4bn from a previous estimate of between €3.2bn and €3.4bn.

Predicting ”significant growth” in the global market in 2005, Vestas said escalating demand was pressuring the entire windpower industry – turbine manufacturers and sub-suppliers alike.

”This massive growth has significant implications for Vestas, as the activity level in all parts of the organisation is extremely high, setting both Vestas and its suppliers under pressure,” the company said.

In addition to component shortages, Vestas was also blighted by shoddy quality in some deliveries from sub-suppliers. This, Vestas said, ”triggered substantial additional warranty provisions and revised product development plans.”

Furthermore, delayed deliveries, especially in the US market, pushed shipping, installation and commissioning costs over budget and exerted further downward pressure on the EBIT margin.

In morning trade the share were 13.8 per cent lower at DKr117.25 (€15.7) on the Copenhagen stock exchange.

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