* Reiterates that 2013 will be worse than this year
* Sees medium term EBIT margin in high single digits
* Says to increase focus on selected emerging markets
* To transfer sales staff from South Europe to South America
(Adds details, background, quotes)
AARHUS, Denmark, Oct 3 Ailing Danish wind
turbine manufacturer Vestas said on Wednesday it is
stopping all non-profitable projects as it battles worsening
prospects by slashing costs and jobs to lift medium-term
operating margins to high single digit levels.
Vestas said at its capital markets day it would also focus
on emerging markets in a bid to regain growth and offset cooling
demand in mature Europe and United States markets as government
austerity measures hurt.
The company's chief financial officer, Dag Andresen, said
Vestas would stop and close down all non-profitable projects in
areas such as research and development.
Products which cannot reach the market within 18 months or
will not be profitable for the firm within 24 months will be put
on the chopping block, he said.
Vestas, which is repeatedly the subject of takeover
speculation and has already announced steep job cuts, has been
hammered by a demand slump, with austerity measures reducing
support for renewable energy and financing for projects drying
Rising costs and fierce competition, including from Asian
rivals, have added to its problems.
Vestas on Wednesday reiterated its expectation that 2013
would be even tougher than this year, a factor which pushed down
its share price by over 5.0 percent by 1500 GMT.
The company's order intake in the first half of the year is
already 24 percent down on the corresponding period a year
Vestas said it hoped to achieve a medium-term operating
margin in the high single digits, and that focus on cost cutting
and emerging markets would help it achieve its target.
"We are on track in taking costs out of our products," said
head of sales, Juan Araluce.
In August, the company forecast an operating profit margin
of between 0 and 4 percent for the year 2012.
The company has already closed a range of factories
worldwide and will be transferring sales staff from South Europe
to South America.
In the large United States market, where an important tax
credit on renewable energy is set to expire at year-end, Vestas
is also considering how many factories it should have.
It has previously said that if the credit is not extended,
it could be forced to lay off 1,600 employees.
The group plans to increasingly turn its focus to Brazil,
Mexico, South Africa, Ukraine, Philippines, Romania and Vietnam,
"Emerging markets are expected to see double-digit growth -
these markets still come from a small installation base," said
The International Energy Agency has estimated that 90
percent of the growth in energy demand over the next 25 years
will come from China as well as emerging markets.
(Reporting by Mette Fraende and Shida Chayesteh; Editing by Mia
Shanley and David Cowell)