Key figures:
* Revenues: €1,033 million (-42%)
* EBITDA: €132 million (-35%)
* EBIT: €49 million (-50%)
* Net profit: €22 million (-65%)
* Orders in H1: 762 MW and order backlog of 1,894 MW. Order flow recovered in July
The company is advancing on all fronts:
* it entered five new markets in the first six months of the year
* adapting capital expenditure to demand: capacity is being expanded in the USA, India and China (construction of the sixth manufacturing plant in China will commence shortly)
* new product launches: Gamesa G97-2 MW wind turbines for low winds
* revenues from operation and maintenance services grew 70%
* in-house development of 5 MW and 6/7 MW offshore platforms. The pre-series will be ready in 2013 (5 MW) and 2015 (6/7 MW), in time for bidding in the UK
The economic situation and regulatory delays (in the EU and the US) have led to a revision of the guidance for 2010 (MWe sales of 2,400-2,500 and WTG EBIT margin of 4.5%-5.5%) and 2011 (MWe sales of 2,700-3,300)
Gamesa maintained and/or improved its main efficiency and productivity ratios in H1 2010 despite the weak economic situation and regulatory uncertainty, particularly in Europe. The cost efficiency plan (over €80 million saved in H1 2010) boosted the EBITDA margin in the core business, wind turbine manufacture, to 14.3% in H1 2010, i.e. 0.8 points more than in H1 2009 (13.5%). This division’s EBIT margin was 5.8%.
Consolidated revenues amounted to €1,033 million (-41.7%) a result of the situation in the economy and the industry (regulatory uncertainty in southern Europe, i.e. Spain and Italy, and in the US), the sharp seasonal fluctuations expected this year, and the company’s policy of aligning production with customer orders and delivery schedules.
Asia, the company’s largest market, accounted for 34% of total sales. International markets now represent 89% of total sales (MWe sold): Asia is Gamesa’s top market, with 34% (China: 25%; India: 9%) vs 13% in H12009, followed by the Rest of Europe (29%), the USA (17%), Spain (11%) and RoW (9%). Significantly, Spain has declined as a strategic market, from 36% in H1 2009 to 11% this year.
Gamesa’s EBITDA in H1 2010 amounted to €132 million (-35%), EBIT to €49 million (-50%) and net profit to €22 million (-65% with respect to H1 2009).
The strong seasonality expected for activity in 2010 required the company to bring forward project production in the US and China with a view to fulfilling commitments customers this year. This increased the working capital/sales ratio to 24% in the wind turbine division and 42% at consolidated group level.
Gamesa ended the period with a sound financial position, having reduced net debt by €209 million to €345 million. At 30 June 2010, the debt/EBITDA ratio stood at 1.1x, below the company’s guidance limit (2.5x).
Order flow slowed in Q2 2010 but revived in July
In H1 2010, the company obtained 762 MW in new orders (341 MW in Q2), and the pipeline reached 1,894 MW, covering 77% of the new 2010 sales guidance.
Sales in Q2 (341 MWe) reflect uncertainty and regulatory volatility in the wind power market in southern Europe (mainly Spain and Italy), which led Gamesa to revise its guidance for 2010 sales to 2,400-2,500 MW (previously 2,700-3,000 MW) and EBIT margin to 4.5%-5.5% (from 6%-7%). Gamesa also downgraded its guidance for 2011, to sales of 2,700-3,300 MW (previously more than 3,600 MW); that range will be fine-tuned in the coming months when Gamesa presents its Strategic Plan 2011-2013.
The company welcomes the recent agreements in Spain and Italy with regard to renewable energy, since it considers they will revive the industry in the short and medium term. In fact, order flow increased in July to 205 MW for delivery this year.
Five new wind energy markets in six months, and expanding production capacity in other countries
Despite the weak economy and regulatory uncertainty in some of its main markets, Gamesa moved forward in all the lines of action defined in recent months. In the first half of 2010, it landed orders in five new markets, including Sweden, Turkey and Costa Rica.
And it plans additional investment in manufacturing capacity in growth regions:
* In China, expansion of production capacity (400 MW) for the G8X-2.0 MW product, which commenced in 2009; was completed in Q2; construction of a new 500 MW plant has commenced in Jilin, and construction of a new plant in Inner Mongolia, the company’s sixth plant in China (500 MW), will commence shortly In Q2 2010,
Gamesa signed another 1,000 MW of joint development agreements for delivery between 2011 and 2013, raising the total joint development agreements for 2010-2013 to 1,850 MW
* In India, Gamesa plans to attain a 10% market share in its first year of operation there and to double production capacity to 400 MW by 2011. It is also considering the implementation of the 2.0 MW platform in India
* In the US, progress is being made to expand G90 capacity through strategic agreements with suppliers. Gamesa plans to supply neighbouring markets from its Pennsylvania plants: it recently signed an exclusive deal to supply Cannon Power’ farms in Baja California (Mexico) and signed orders or agreements in Costa Rica and Honduras.
New G9X platform and in-house development of offshore WTGs (5 MW and 6/7 MW)
Gamesa is currently launching a new product platform, G9X, and is beginning commercialisation of its new Gamesa G97-2.0 MW turbine, a Class IIIA product for low wind sites with 16% more swept area than the current G90 and nearly 14% more power output. The G97-2.0 MW has a new aerodynamic design to guarantee maximum production with minimum noise.
During the period, Gamesa also progressed with commercialisation of the G10X-4.5 MW, which was chosen by 18 IPPs to bid for wind concessions in Spain.
Gamesa has also decided to develop offshore platforms in-house, which will enable it to play a key role in this market in the medium-long term and ensure it participates in demand arising in northern Europe. Using multi-MW technology (developed for the G10X-4.5 MW), the company is working on two offshore product platforms: 5 MW, whose prototype will be ready in 2012 and pre-series in 2013; and 6MW/7 MW, whose pre-series will be ready in 2015, with a view to future offshore tenders in the UK.
Gamesa also continues to strengthen its O&M services area, which increased sales by 70% in H1 2010 to €145 million.
Wind farm development, focused on building the pipeline
In H1 2010, the wind farm development and sale business continued to concentrate on building out its pipeline. At 30 June, the company had 720 MW (+11% in the last 12 months) in the final phases of construction and commissioning.
Gamesa has delivered a total of 376 MW in the last 12 months. The pipeline amounted to 22,077 MW at the end of June, including a significant increase in the components with greatest visibility (probable and practically certain), which account for 46% of the total.
Notable events in the period include progress with wind farm development linked to WTG sales in China; and joint development agreements for the period 2010-2013 now total 1,850 MW.
