11/08/2004
FKI plc withdraws from the wind turbine business
In the year to March 2004 DeWind made an operating loss of Euro 9.1 million.
A number of recent developments have had a material adverse impact on the market position of DeWind and its operating model. The rapid consolidation of wind turbine manufacturers and the increasing influence of major wind power developers have significantly increased competitive pressures. The major impacts can be seen in continually reducing turbine prices, increasingly onerous contract terms and conditions and higher levels of investment in new product and inventory. As a consequence, the cash commitments required, particularly for small turbine manufacturers, have increased significantly.
In addition, the decline in DeWind’s traditional market in Germany has led to a much weakened market position. As a consequence FKI has, on detailed analysis, decided not to invest further funds to develop this business.
It is intended that, as part of an orderly rundown of the activities, existing customer commitments will be met and some new transactions accepted. Discussions, already ongoing, to seek technology transfer agreements with interested parties, notably in the Far East will continue.
The full impact on jobs will not be fully understood in detail until consultation is underway with employee representatives.
Consultation with employees will begin immediately regarding potential redundancies in Germany and the UK. DeWind currently employs 316 people, including approximately 130 service and support staff. The proposal is to provide ongoing customer support from a service organisation based in Germany.
FKI Chief Executive, Paul Heiden, said
“I am disappointed that FKI had to make this decision. At the January 2004 Strategic Review I described the wind turbine business as a high-risk but potentially high-reward venture. During the past twelve months, however, a number of issues have weakened DeWind’s position and delayed or impaired its growth opportunities. Now, the requirement for product development and the ramp-up in inventories to address future sales opportunities require further significant investments.”
“The Board does not believe a material cash commitment is justified by the risk profile and potential returns of the wind turbine business and hence believes that the proposed withdrawal is in the best interests of shareholders.”
A number of recent developments have had a material adverse impact on the market position of DeWind and its operating model. The rapid consolidation of wind turbine manufacturers and the increasing influence of major wind power developers have significantly increased competitive pressures. The major impacts can be seen in continually reducing turbine prices, increasingly onerous contract terms and conditions and higher levels of investment in new product and inventory. As a consequence, the cash commitments required, particularly for small turbine manufacturers, have increased significantly.
In addition, the decline in DeWind’s traditional market in Germany has led to a much weakened market position. As a consequence FKI has, on detailed analysis, decided not to invest further funds to develop this business.
It is intended that, as part of an orderly rundown of the activities, existing customer commitments will be met and some new transactions accepted. Discussions, already ongoing, to seek technology transfer agreements with interested parties, notably in the Far East will continue.
The full impact on jobs will not be fully understood in detail until consultation is underway with employee representatives.
Consultation with employees will begin immediately regarding potential redundancies in Germany and the UK. DeWind currently employs 316 people, including approximately 130 service and support staff. The proposal is to provide ongoing customer support from a service organisation based in Germany.
FKI Chief Executive, Paul Heiden, said
“I am disappointed that FKI had to make this decision. At the January 2004 Strategic Review I described the wind turbine business as a high-risk but potentially high-reward venture. During the past twelve months, however, a number of issues have weakened DeWind’s position and delayed or impaired its growth opportunities. Now, the requirement for product development and the ramp-up in inventories to address future sales opportunities require further significant investments.”
“The Board does not believe a material cash commitment is justified by the risk profile and potential returns of the wind turbine business and hence believes that the proposed withdrawal is in the best interests of shareholders.”
- Source:
- DeWind GmbH
