UPDATE 1-Vestas sells factories for 1 euro to cut costs
* Sells manufacturing units to Germany's VTC Partners
* Says deal to lower costs by about 30 mln euros (Adds details, background, quotes)
COPENHAGEN Oct 9 (Reuters) - Danish wind turbine group Vestas is selling six manufacturing units for just 1 euro ($1.36) as part of a drive to cut fixed costs and give it more flexibility to respond to changes in demand.
Vestas has been hit hard by cuts in subsidies for renewable energy from cash-strapped governments and has shed over 5,000 jobs, closed plants and sold unprofitable businesses in an attempt to recover from two years of net losses.
"With this sale, we are through the initial divestments we had planned," head of investor relations Lars Villadsen said on Wednesday.
The Danish group said it had agreed to sell both of its machining units and all four of its casting units to German industrial group VTC Partners GmbH.
Around 1,000 staff in primarily China, but also Norway, Sweden, Germany and Denmark will transfer to the new owner.
Under the deal, Vestas will receive up to 25 million euros if the units achieve certain undisclosed criteria. No debt is changing hands.
The Danish group will now outsource machining and casting work and estimated the deal would lower its costs for casted components by about 30 million euros over the next two years.
Last week, Vestas said it would close an assembly factory in Italy, affecting 120 staff, and in June last year, the group announced the closure of its tower factory in Varde, Denmark.
Two weeks ago, it agreed a joint venture with Japan's Mitsubishi Heavy Industries for offshore wind turbines, adding financial muscle to its attempts to catch up with rivals in a sector viewed as the future of wind power.
At 0720 GMT Vestas shares were up 1 percent at 146.5 Danish crowns. The stock has bounced back from a low of 23.25 crowns last year, but is still well below its 2008 high of 700 crowns.
- U.S. pledges 3,000 troops to fight Ebola; experts say more needed
- Tesla prevails in top Massachusetts court over direct sales
- Russia needs government investment to avoid recession, says former finance minister
- Ahead of independence vote, Britain pledges state funding to Scotland |
- Stocks turn higher ahead of Fed meeting, oil up