Gamesa minimises fall out from 75% Q1 profit fall

SPAIN: Despite Spanish turbine manufacturer Gamesa reporting, May 13, a chilling 75% drop in Q1 profits the stock market reaction was neglible, with just 0.1% falling off share value at the close of that day's session.

Confidence in the company partly rested on a firm order claim of 1.55GW end-March. That marks 54% of Gamesa's 2.7-3GW sales expectation over 2010, 4.8-14.3% down on the 3.15GW sold last year.

The increased dominance of export markets in Gamesa's business, hinged on the boom markets of China, USA and India, were also viewed favorably, together with the company's belt-tightening activities.

Speaking about the first quarter net profit drop to €8 million this year, from €32 million last, CEO Jorge Calvet put the poor results down to "the weak global macroeconomic and financial situation".

Last year's changes to Spanish regulations also put a six-month break on new orders in 2009 and has slowed new growth, forcing Gamesa to cut jobs and close its Alsasua blade plant in Navarra region.  

Calvet highlights, however, that while first-quarter capacity sales were just 468MW-43% down on the same period last year-80% was abroad, including the boom markets of China (18%), USA (14%), rest of Europe (32%) and India (3%). The rest of the world accounted for 13%.

Gamesa is also increasing turbine production capacity at all three of its overseas industrial bases, namely in China, USA and India.

Falling capacity sales was matched by a 43% drop in invoicing, to €474 million. Earnings before interest and tax (Ebit) fell 51% to €23 million. Nevertheless, Calvet claims the Ebit margin fell only slightly-from 6.5% first-quarter last year to 6.2% this-due to Gamesa's strategy of tightening order to production and delivery times globally.

Furthermore, Calvet says Gamesa's plans to grow operations and maintenance (O&M) activity into core business has already produced a 50% hike in sales to €60 million.

Calvet told Windpower Monthly he expects Gamesa's O&M portfolio to grow from 12GW last year to 20GW in 2012, with annual revenue from these activities rising from €225 million to €400 million over the same period.