Profit and loss

Danish wind-turbine manufacturer

has announced a 70 per cent increase in first-quarter profits but added that it has been forced to cut 1,900 staff following weak demand in northern Europe.

The group said that first-quarter profits after tax were up to €56m (£74m) and revenue in the period reached €1.1bn - a 58 per cent increase on the previous year. The first quarter saw a 21 per cent increase in shipped turbines and a 29 per cent increase in shipped wind-power systems with an aggregate capacity of 885MW.

Order backlog amounted to €4.9bn at the end of March 2009, with Vestas continuing to expand its operations in the US and China. However, a drop in demand in northern Europe has led the group to cut staff and reduce investment in property, plant and equipment by approximately €200m.

In a statement, the company said: ‘Vestas no longer believes that the northern European markets in the years ahead will be able to absorb the capacity released, as a result of the US expansion; Vestas is unfortunately compelled to reduce production capacity in northern Europe.’

As a result, around 1,900 employees will be cut, with the majority of reductions to be made in Denmark and England. Following the reductions, the company expects to have factory capacity to manufacture, ship and install 10,000MW in 2010.

Speaking about the future of its blade-manufacturing plant on the Isle of Wight, Vestas said that it would initiate consultations with the employees to discuss the future of the factory, but added that investments in the research centre would continue.

Looking ahead, the company expects revenue to increase by 20 per cent in 2009 and said that net working capital, projected to account for a maximum of 10 per cent of revenue at the end of 2009, will fluctuate heavily in the course of the year.