IKEA behind Vestas' Romanian million-euro sale

The Swedish furniture group's parent company was the recipient of Vestas' heavily loss-inducing wind farms in Romania, IKEA confirms to EnergyWatch.
Photo: Henning Bagger/Ritzau Scanpix
Photo: Henning Bagger/Ritzau Scanpix

Last week's spectacular divestment of Vestas' Romanian wind farms went to IKEA. Through parent company Ingka Group, the Swedish furniture group acquired an 80-percent share of what is revealed to be seven wind farms in southeastern Romania totaling 171 MW, for EUR 136 million, IKEA confirms to EnergyWatch.

"We are pleased to enter the renewable energy market in Romania with this acquisition. The 80 percent share supports our target of generating as much renewable energy as we consume, and this investment brings us one step close to realizing our 2020 goal," says Krister Mattsson, head of Ingka Investments.

While for the acquisition for IKEA's part is peculiar, as it adds 64 turbines to the company's total wind portfolio of 534 turbines in now 14 countries, it is for Vestas' part odd for a number of reasons. Not least due to the projects' backstory.

Massive losses

The wind farms thus stem from the beginning of this decade, when Vestas, contrary to its usual practice, entered the projects as guarantor. This was done partly to clear out the surplus of V90s of the time, partly from the expectation that the Swedish/Romanian project developer would quickly sell the turbines to another party, rendering the producer's outstanding amount short-lived.

Meanwhile, the wind farms were never sold on as planned, with Vestas instead ending up becoming the owner. This ownership has not been lucrative, mildly put. Due to factors like Romanian authorities' interference in 2013 with the country's then-generous subsidy schemes, over the years these turbines have induced a far heavier loss for Vestas than what is now earned from the divestment.

Wind Power Invest, Vestas' parent company for the three involved companies – EWIND, Smartbreeze and Eol Energy Moldova – has over the past seven years accumulated a pre-tax deficit of EUR 290 million. Of these, the vast majority stem from the Romanian projects, whose value in 2015 alone was impaired by more than EUR 67 million.

Slashed stock and recovery

Last week's sale was not a great success story, either. Because even though it got rid of some unwanted assets and added about EUR 100 million to this year's expected operating result, it caused quite the uproar among investors, as the sale did not prompt Vestas to up its earnings guidance for the year, which was last month adjusted to 8-9 percent EBIT.

The fact that a major part of these earnings apparently consisted of a one-time payment rather than a new turbine sale entailed the stock price dropping by just over 6 percent following the announcement. This corresponds to more than EUR 800 million of the turbine maker's market value being shaved off. Since then, this amount has more or less been reattained, while stock has since risen by over 9 percent.

English Edit: Jonas Sahl Jørgensen

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