Vestas offloads converters and controls business

4C Offshore | Tom Russell
By: 10/08/2022 Vestas

Vestas announced it has signed an agreement with KK Wind Solutions (KK) for the sale of Vestas’ converters and controls business, which includes Vestas’ three converters and control panels factories in Denmark, India and China. It includes associated staff functions, with around 600 Vestas employees to become part of KK.

As part of the agreement, KK will exclusively supply converters and control panels to Vestas from the three factories, while the agreement enables potential for local expansion and job growth by extending the use of converter technologies in areas adjacent to Vestas’ core business. Furthermore, the agreement between Vestas and KK includes joint development of converters with an engineering team at Vestas fully dedicated to the partnership. The agreement follows collaboration between KK and Vestas, most recently exemplified by localisation of offshore power conversion modules and low voltage cabinets in Taiwan.

The transaction is expected to close in the first quarter of 2023, subject to receipt of approvals from the relevant regulatory authorities and separation of the converters & controls busines.  

“Across our global supply chain footprint, we are increasingly collaborating with partners to scale efficiently and build on the foundations we have established. This includes focusing our own resources to where they are most efficient and moving parts of our business to be run by other industry leaders who can create more value and secure additional long-term jobs. I’m therefore very excited about the agreement with our partner KK Wind Solutions, which can help grow and mature the wind energy supply chain”,
said Tommy Rahbek Nielsen, Executive Vice President and COO at Vestas.

“As an established partner to Vestas, we aim to take a leading role in maturing the industry's supply chain and accelerate the green energy transition. The acquisition will bring immediate scale to our operations and extend our global footprint, while adding new competencies by welcoming over 600 highly skilled and experienced employees. As a result, we will be well-positioned to develop and deliver world-class sustainable energy solutions to top tier wind OEMs and expand further into adjacent industries, such as Power-to-X”,
said Mauricio Quintana, Chief Executive Officer, KK Wind Solutions.

Vestas also unveiled its Q2 2022 results having generated revenue of €3,305m – a decrease of 7 percent compared to the year-earlier period. EBIT before special items amounted to EUR 182m, resulting in an EBIT margin before special items of 5.5 percent, compared to 2.7 percent in the second quarter of 2021.

The quarterly intake of firm and unconditional wind turbine orders amounted to 2,153 MW, and the value of the wind turbine order backlog was €18.9bn as at 30 June 2022.  In addition to the wind turbine order backlog, at the end of the quarter, Vestas had service agreements with expected contractual future revenue of €31.3bn. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at €50.2bn – an increase of €2.1bn compared to the year-earlier period.

Group President & CEO Henrik Andersen said: “The first half of 2022 was characterised by geo-political uncertainty and supply chain disruptions that have caused costs to increase and an energy crisis to unfold. This development underlines the urgent need for a sustainable energy transition and drives stronger policy support for renewables across the globe but also creates a highly challenging business environment that negatively impacts Vestas’ financial results. In this environment, we achieved a revenue of EUR 3.3bn in the second quarter of 2022, and in accordance with our guidance for the full year, profitability remained challenged with an EBIT margin of (5.5) percent. In the quarter, our Service revenue grew 12.5 percent year-on-year, but was negatively impacted by one-offs related to a few projects in specific geographical areas. We reinforced our onshore leadership with an order intake of 2.2 GW and an average selling price on onshore wind turbines of EUR 0.96m/MW, a 22 percent increase year-on-year. The sustained price increases show we maintain the discipline to protect value creation and pave the way towards our profitability target. We continue to execute on our strategy to ensure Vestas continues to lead the energy transition and is ready to profitably grasp future growth. Everyone at Vestas is doing a great job in very tough circumstances, and we remain thankful for the ongoing support from our customers and partners.”

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