New Vestas chairman targets costs and communication
Sony Mobile Communications chief executive Bert Nordberg was elected chairman at Vestas’ annual meeting on 29 March, replacing Bent Carlsen, who stepped down after 16 years.
The Danish turbine maker describes Nordberg as a restructuring expert, having carried out major cost-cutting and Sony’s buyout of Ericsson’s share of the Sony-Ericsson joint venture. But he could not have picked a more difficult moment to join Vestas — in the aftermath of two profit warnings and a loss-making year, not to mention the 80% fall in the company’s share price since 2010.
Nordberg tells Recharge he conducted “thorough research” on Vestas when asked if he would take on the new role.
“I have a former colleague who was already on the board, so I could talk a lot with him about where they are and what the challenges are,” he says, referring to Håkan Eriksson, who is head of Ericsson for Australia, New Zealand and Fiji, and has been a Vestas board member since 2009. Both men are former heads of Ericsson Silicon Valley.
Ultimately, however, it was a long discussion with chief executive Ditlev Engel that convinced the Swede that Vestas has a “bright future”. “There have been ups and downs, and there happened to be a dip in the last quarter, but you have to study things from a helicopter view to see the opportunity,” Nordberg says.
He is a strong supporter of the chief executive, who has been at the centre of a storm of criticism since Vestas issued the first profit warning in October last year. “You have to be careful of the kind of superficial analysis you have seen in the media,” Nordberg says. “I have done a much deeper analysis and I support Ditlev.”
Nordberg says his main priority will be to get the company’s costs of building turbines back to the levels originally envisaged.
“Sales and the order intake have been pretty okay, so you come to the costs side. Some of the products we have sold have too-low margins, so we are working on that,” says Nordberg, who adds a number of projects are under way to tackle higher raw-material and internal costs.
He says that Vestas’ cost structure is “built for a little bit of a bigger company than we are”. On the other hand, he emphasises that the action plan Vestas presented to the market in January still stands.
Nordberg does, however, want to change the company’s communication practices. He agrees with criticism that the company is seen as too guarded, and says the problematic financial reporting over the past few months cannot happen again.
“We shouldn’t surprise the market like we did,” he says. “We need to have a much more stable outlook and deliver according to the way we forecast.” He adds that the company needs to improve communication with its major shareholders and banks.
In recent months, Vestas’ senior management has spoken of forming a strategic partnership to develop its offshore business. “We have to be there, but whether with someone else, remains to be seen,” says Nordberg.
Vestas admitted recently that it “stepped back” from the Chinese market due to low prices.
But Nordberg, who has been on the board of Ericsson China for about a decade, expects the market environment in China to change in the medium term.
“Inflation is pretty high, so the more you think about it, the more you see that their current cost advantages will not be so big in the long term,” he says.
“When customers calculate the cost of energy production instead of the cost of the wind turbines, then we will have a big advantage.”