VESTAS

Vestas used to be a bit like Nokia; a Scandinavian champion that was the world's leading company in a sector, wind power, that seemed to be inexorably growing. Its hyperactive boss, Ditlev Engel, was an omnipresent figure at international gatherings of the good and the great. Denmark, a small country on the edge of an increasingly irrelevant continent, could still cut the mustard in some things.

Today Nokia is a shadow of its former self, as it has been overtaken by Apple and then Samsung. And so too is Vestas. When Mr Engel took over as Chief Executive on 1 May 2005, the share price was a lowly kr.73,50. During the next three years, there was only one way for it to go, as there was lots of money to go around and orders rolled in. The price topped on 17 June 2008 at kr.692, giving the company a market value of almost kr.130 billion. Four months later, Mr. Engel was duly crowned as Denmark's leader of the year.

Yet even at the moment of its greatest triumph, there were problems. Making windmills turned out to be not that difficult, and other countries could do it much more cheaply than expensive Danes. Furthermore, wind power remained uneconomic compared with fossil fuels and other forms of energy; when the financial crisis hit in 2008, the subsidies dried up. Only a few months after being crowned leader of the year, Mr. Engel was forced to announce a pre-tax loss for 2008 of kr.4.9 billion and a kr.6 billion rights issue.

Since then the share price has been in freefall. The bottom was reached last November when it hit kr.24. Since then, Mr. Engel's days have been numbered; the only question was when he would have to go. The answer to that was today.  

Investors still believe that Vestas has a future; despite continuing losses in 2013, the share price is back up to kr.109, and it rose 5% on news of Mr. Engel's demise. However, while the shares are owned by many thousands of ordinary Danes, I wouldn't recommend buying them. The best that Vestas can hope for is to be bought up by one of those lower-cost competitors. Wind power is a good idea, and it may well turn out to be economic at some point in the future (though the shale gas revolution is pushing that point further and further away); it just won't be economic if Danes are making the kit.

Walter Blotscher