* Ex-Ericsson executive Anders Runevad to be new CEO
* Shares jump 6 pct
* Second-quarter earnings better than expected
* Raises full-year cashflow guidance
By Mette Fraende
COPENHAGEN, Aug 21 Denmark's Vestas
ousted Chief Executive Ditlev Engel on Wednesday in an attempt
to win back investor confidence after a string of profit
warnings and pending lawsuits from angry shareholders.
During Engel's eight years of service the group has been
overtaken by General Electric as the world's biggest wind
turbine manufacturer, has issued five profit warnings and in
recent years has parted company with two chief financial
officers and one chairman.
Anders Runevad, with nearly three decades of experience at
Swedish telecoms equipment maker Ericsson, will
replace Engel, who has struggled to turn around Vestas as the
wind power industry was hit by overcapacity and falling state
Though Engel's departure comes just as signs of a recovery
are beginning to emerge, Alm Brand markets analyst Michael Friis
Jorgensen said: "Large institutional investors have a good
memory. Once they have been burned by management, they don't
"Changing the top of the management will give investor
confidence a fresh start."
Vestas also announced a smaller-than-expected fall in
second-quarter earnings and raised its guidance on full-year
cashflow - an area of particular concern for investors.
"We have taken a firm grip on the balance sheet and we feel
now is the moment to change the CEO and get new leadership in
the company," chairman Bert Nordberg said in a webcast.
"The reason for this leadership change is that we want to
finalise the restructuring and we now want to go into stable,
Nordberg and his new CEO both worked at Ericsson as far back
as the mid-1990s and cemented their relationship during
Nordberg's tenure as head of mobile phone joint venture Sony
"He (Runevad) has a broadly good reputation," said Bengt
Nordstrom, head of telecoms consultancy Northstream, adding that
the two know each other "extremely well".
Alm Brand's Jorgensen believes that the link between the
executives will be welcomed by investors.
"It brings reassurance that Nordberg's strategy will be
carried out: to focus on earnings, earnings and earnings," he
said. "The next step for the new CEO will be to try to gain
market share in a competitive market that is seeing an
increasing number of players."
In addition to the likes of U.S. giant General Electric,
Spain's Gamesa and Germany's Siemens,
Runevad will have to see off Chinese rivals such as Goldwind
, United Power, Sinovel and
Ming Yang as they look to expand beyond their saturated
Vestas shares jumped more than 11 percent in early trade and
were up 6.1 percent at 1320 GMT, against a 0.2 percent rise in
the Copenhagen stock exchange's benchmark index.
The share price has tripled since the start of the year, but
is still down nearly 85 percent from its 2008 peak.
The company's restructuring plan has focused on job cuts,
plant closures and an exit from unprofitable operations. It has
also halted a number of research and development projects.
Vestas has shed 5,468 jobs since the end of 2011 and expects
to cut at least 1,253 more to leave it with a maximum of 16,000
employees by the end of this year.
The measures appear to be starting to bear fruit. In May it
posted a more than 50 percent drop in first-half operating
losses, helped by lower costs and higher turbine prices.
The improvement, however, has been clouded by the investor
lawsuits. Only last week Vestas received a claim from pressure
group Deminor on behalf of 87 investors seeking damages
totalling 80 million Danish crowns ($14.4 million), claiming
that profit warnings should have been issued earlier.
The lawsuit is directed against Engel, former chairman Bent
Erik Carlsen and former CFO Henrik Norremark. Current Chairman
Nordberg said the legal issues had not influenced the board's
decision to replace Engel.
Vestas posted second-quarter earnings before interest and
tax (EBIT) down 33 percent to 12 million euros, from 18 million
in the same period last year. The consensus estimate in a
Reuters poll of analysts was 5.5 million euros..
It also raised its expectations for free cashflow this year
of about 200 million euros, against earlier guidance of merely
"positive" cashflow, and stood by its forecast for an underlying
EBIT margin of at least 1 percent.
Chief Financial Officer Marika Fredriksson will assume the
positions of acting group president and chief executive until
Runevad takes over on Sept. 1.