Thursday, September 9, 2010

Wind: Vestas will not chase market share at any price; Stock Down Another 4% (VWS.CO)

 Kinda saw this one coming after:
Sept. 3: "Wind: "Vestas May Cut Forecasts a Third Time, Top-Ranked Investor Says" (VWS.CO)"
Aug. 18: "Clobbered in Copenhagen: "Vestas Wind shares slump up to 26% after group slashes outlook" (VWS.CO)"

From Reuters:
* No specific market share target; not competing on price
* Vestas largest non-Chinese player in China
* Profit warning 2 weeks ago sent shares to 22-month low (Adds Vestas Americas president comments)
By Braden Reddall

COLORADO SPRINGS, Colo., Sept 1 (Reuters) - Wind turbine maker Vestas Wind Systems (VWS.CO) is more concerned with keeping customers and spreading risk than with retaining its global number-one spot, and does not plan to compete on price.

Under pressure after a profit warning two weeks ago devastated its stock, Vestas executives on Wednesday sought to allay investor concerns about the competitive threats in an industry where growth has slowed.

The company held on to its world-leading position in 2009 with a 12.5 percent market share, but General Electric Co (GE.N) was close behind at 12.4 percent, according to BTM, consultants based in Vestas's home country, Denmark.

"We have no specific market share targets," Chief Executive Ditlev Engel told Reuters.
"Looking after the customers, we sort of tend to believe that then things will click. The products and the presence are really what matters for them. Whatever that will give you in terms of market share, I don't know."

Vestas also faces turbine-making rivals from emerging markets, including fast-growing Chinese companies Sinovel, Goldwind (002202.SZ) and Dongfang, as well as India's Suzlon Energy Ltd (SUZL.BO). But Vestas sees no point in discounting for customers who have 20-year investment horizons.
Bob Fritz, its senior vice president for quality, told a meeting of investors on Wednesday that price wars are a "desperation" strategy and he was echoed by colleagues.

"We will not go into price competition and we are not going to compete with the cheapest," Finn Strom Madsen, president of Vestas Technology R&D, later told the meeting in Colorado, where Vestas has built new manufacturing plants.

That U.S. focus is expected to pay off, regardless of power price volatility, since the mandates of U.S. states alone require over 100 gigawatts (GW) of new renewable power capacity by 2020, according to Vestas Americas President Martha Wyrsch.

Despite a "slow" North American market now, Vestas was doing relatively well, receiving half of the firm new orders in the region so far in 2010.

"We're winning at least our fair share of what is getting awarded," Wyrsch told Reuters.
As for elsewhere, Engel noted Vestas was the largest non-Chinese player in China, which was the top market in 2009.

"We are number one, two or three in nine of the 10 largest markets in the world," he said in an interview on the meeting's sidelines. "That is very important for us in terms of a risk perspective -- we don't want to be dependent on any one area."

The top Vestas executive in China, pointing out that the wind market there doubled in 2009, said he still expects more growth this year, even while the Chinese government "takes a step back" to assess the sustainability of the expansion.

The Vestas share price is down 28 percent since Aug. 18, when it cut its 2010 profit forecast because of order delays in the United States, Spain and Germany. But Engel still expects the orders next year, since they were held up by permitting....MORE