On 26 May 2005, less than one month after he officially takes charge, Ditlev Engel announces his strategy for Vestas up to 2008. The strategy is called “The Will to Win” and includes a new vision and mission for Vestas. The vision is called “Wind, Oil and Gas” and rejects the perception of wind energy and Vestas as “a romantic flirt” with alternative energy forms, and instead states that wind is a competitive energy source on par with oil and gas.
The plan has three main goals:
- First priority: Earnings Before Interest and Taxes (EBIT margin) of at least ten per cent
- Second priority: A Net Working Capital of no more than 20-25 per cent of turnover
- Third priority: A global market share of at least 35 per cent
The prioritisation of these goals reflects that profitability is the most important to Vestas.
Vestas increases sales in 2005 by 52 per cent compared to the previous year. At the end of the year the Group has sold turbines with a total capacity of 3,185 MW. This is a difficult year for Vestas financially, however. One factor causing the difficulty is the high level of activity throughout the entire industry, which means that a number of Vestas’ suppliers are unable to deliver components in the amounts and quality Vestas needs. In addition, poor income for a number of large projects in North America and large guarantee provisions contribute to disappointing profits and losses for the year.
There are encouraging trends in the results for the year, however, when the effect of a number of the initiatives in “The Will to Win” begin to show through, such as an historically low net working capital of 14 per cent.
In August, a new blade factory opens in Portland, Australia and Vestas also begins establishing a blade factory in Tianjin, China.
Towards the end of the year Vestas receives its biggest order ever when Horizon Wind Energy in the USA orders up to a total of 800 MW of the V82-1.65 MW and V80-1.8 MW turbine types.
2006: Consolidation
The year was very much one of consolidation. The spring brings several large orders from places such as Germany, Spain, New Zealand, France and Italy.
The consolidation rubs off on Vestas’ annual financial statement where sales increase from EUR 3,583 million in 2005 to EUR 3,854 million in 2006.
Vestas’ blade factory in Tianjin opens making it the first factory in China. Even before the official opening Vestas announces that increased demand means that the factory will be expanded to double its production capacity.
In November 2006, the goals in The Will to Win strategy for 2008 are tightened to an EBIT margin of 10-12 per cent, a net working capital of a maximum 20 per cent and a market share of at least 35 per cent.
2007: No. 1 in Modern Energy
The efforts in 2006 pay off. In January alone, Vestas receives an order for a total of 56 units of V80-1.80 MW wind turbines for delivery in Q3 2007 for the Smoky Hills project in Kansas, USA. The order comes from ENEL North America which is one of the largest companies in North America that owns and runs power plants for sustainable energy. Several orders come in later from Turkey and China.
In the first half-year results it is clear that the goals for the “The Will to Win” are on their way to being reached. Sales and EBIT for the second quarter of 2007 increase to EUR 1,067 million and EUR 90 million respectively, equivalent to 19 and 221 per cent respectively compared to Q2 2006. Thus the “No. 1 in Modern Energy” campaign is launched.
It is clear that the competitive landscape is changing in line with several of the world’s fastest growing economies that demand sustainable, predictable and clean energy sources as a supplement to oil and gas. Vestas expands its position as the world’s leading supplier of modern energy solutions, and the company has installed more than 33,500 wind turbines in 63 countries and on five continents. Vestas installs an average of one wind turbine every five hours, twenty-four hours a day. Our wind turbines generate more than 50 million MWh of energy per year, or enough electricity to supply millions of households. So the time has come for Vestas to prove to the world that it is No. 1 in modern energy.
As the market leader, Vestas has a responsibility to maintain and expand wind power and modern energy as a real complement to conventional energy forms such as oil, gas, and coal. There are also several indications that decisions are on the way which will increase the demand for wind power many times over. Technology, knowledge and more than 25 years of experience with modern energy solutions are ready to move up to the next level.