Vestas CEO warns wind turbine manufacturers could merge or disappear amid cost pressures

Turbine manufacturers face bankruptcies or mergers in an ever-demanding market, Vestas CEO Henrik Andersen warned at the company’s capital markets day.

High prices for raw materials and transport have squeezed turbine manufacturers in recent months, with companies citing these factors as being behind loss-making quarters.

Andersen added that demands for OEMs to invest in technological innovation and localisation were increasing the pressure on manufacturers, with “mid-sized” companies most at risk.

“This cannot go on as an industry that has to solve a major part of the energy transition and work with technology development, localisation of the product and then work with negative Ebit. It won’t last.” Andersen said.

“Some [companies] will probably go together, and it is not always easy. And others will probably disappear and be picked up.”

Andersen noted that Vestas has recent experience of this. He explained that the company had bought out former offshore wind joint venture partner Mitsubishi Heavy Industries to bring their offshore wind business back in-house in an attempt to increase the company’s footprint and customer base.

“[The wind power industry] is not a good market to be in if you are mid-sized and only in parts of the market,” he added.

Vestas had taken firm turbine orders of more than 16GW in the 12 months leading up to September 2021, Andersen said. The company recorded a revenue of more than €15 billion and an Ebit margin of 4.7% in that period. However, he added: “We would like to have more.”

Amid these challenges, Vestas is now aiming for a 10% Ebit margin by 2025 — one year later than initially planned.