Case study: Vestas vs. Gamesa

Résumé du document

Interpretation: In order to benchmark Vestas and Gamesa the report starts with a brief description of the companies' business model and value proposition. In addition, the 2 companies are compared form a financial point of view by analysing strategies, productivity, profit, risk, but also based on the market value.

Scope: The focus is on the renewable energy industry and more specifically on wind energy production, taking into consideration only 2 of the biggest players in the industry: Vestas and Gamesa.

Theories and models: The report analysis is based on the business model, benchmark and financial ratios in order to compare the 2 companies from a strategic perspective.

Extraits

[...] The financial crisis has had a huge impact on the industry Vestas operates in, a crisis which Vestas still suffering from. Vestas still have issues to create new growth in sales, compared to Gamesa that have a decent growth in creating sales. As we already has covered in the analysis of the business model, Vestas focus is on the business service after the sale, which is clear when we look at the order size each employee manage, where Gamesa gets more than 10 times the amount out of each employee. [...]

[...] Also, Vestas shares the risk with the customers who seek for a partnership. As a lifetime project partner, customers can get an energy- based guarantee, which ensures the turbines are fully operational whenever the wind is blowing. This ensures confidence in the returns on their projects.[2] Supporting CVP business services such as wind project planning, procurement, construction, operation and service, and power plant optimization and controlling is what differentiates Vestas from competitors and creates value networks via partnerships and coalitions. [...]

[...] Salary expenses do not have such a high impact of fixed costs as assumed. Even if Vestas does have better ratios than Gamesa, the higher risk for the first is due to the fact that the situation gets worse from year to year, meaning that Vestas experiences negative growth. It looks like Vestas has more financial resources than Gamesa but it is not as good at using them for higher returns. External analysis Looking at the industry level competition is very intense (high exit barriers, high investment needed, strong bargaining power of buyers, for instance, tendency of reverse-auctions, products are slightly differentiated owing to brands and service). [...]

[...] Gamesa has better returns on debt and equity than Vestas regardless of the higher equity, lower debt and lower capital that the latter presents. Therefore Vestas should follow Gamesa's example of a better funds usage and maybe decrease fixed costs through other ways rather than firing qualified people who might have been contributing to the processes' efficiency. Appendixes Appendix Benchmark Summary Vestas vs. Gamesa Appendix Strategic Analysis Appendix Profitability Analysis Performance Analysis Appendix Financial Structure and operating risks Appendix Bibliography 1. [...]

[...] www.gamesa.com 2. www.vestas.com 3. Gamesa Annual Report 2011 http://www.gamesacorp.com/recursos/memoria2011/gb/gamesa-global.html 4. Gamesa Profit & Loss Statement http://investing.businessweek.com/research/stocks/financials/financials .asp?ticker=GTQ1:GR 5. Vestas Annual Report Gamesa Company Profile from Datamonitor 7. Gamesa business plan Presentation from www.gamesa.com 8. Gamesa Corporate Brochure from www.gamesa.com 9. Vestas Company Profile from Datamonitor 10. EDF to purchase wind turbines from Vestas for onshore installations (Datamonitor) 11. [...]