Profits tumble at major OEMs in first six months of 2019

Four of the major OEMs reported lower profits, or even losses, during the first six months of the year, as the industry prepares for a busy second half of the year.

A tale of two halves… Manufacturers are gearing up for a busy second half of the year (pic: Frank Boutrup Schmidt/Vestas)
A tale of two halves… Manufacturers are gearing up for a busy second half of the year (pic: Frank Boutrup Schmidt/Vestas)

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In the January-June 2019 period, GE Renewable Energy and Nordex both recorded net losses, while Vestas and Siemens Gamesa saw their net profits fall 60% and 11% respectively.

Vestas was the only one of the four to also report a fall in revenue for the six-month period. This was despite a record-breaking order intake of 8.7GW.

The quartet’s results all indicate a steep rise in activity in the second half of the year.

As for the other major manufacturers, China’s Goldwind is yet to report its six- month financials, privately-owned Enercon does not routinely divulge its fiscal health, while cash-strapped Senvion has not published any details in 2019. Safe to say, however, they do not make pleasant reading.

Vestas

The Danish company blamed rising costs for the 51% fall in net profit in the April-June quarter. For the first six months, Vestas saw its net profit plummet 60% to €115 million.

New CEO Henrik Andersen, who took over the reins in August, explained that while turbine prices had remained stable — at an average of around €750,000/MW — "further increases in tariffs, raw-material prices and transport costs, continue to increase execution costs", forcing down the manufacturer’s margin.

Revenue dipped 2.5% but was impacted by a particularly low Q1. Andersen said the firm expects an "extraordinarily busy" second half of 2019 and "high activity levels" in 2020.

Vestas narrowed its guidance for 2019 revenue to €11-12.25 billion — compared with €10.75-12.25 billion forecast in Q1.

GE Renewable Energy

GE saw its H1 2018 net profit of $196 million (€175.6 million) fall to a $371 million (€332.4 million) loss this year.

GE blamed "joint venture consolidation, higher losses on legacy contracts, challenging onshore-project execution in Asia Pacific, increased research and development investment, tariffs and pricing" for the fall.

Revenue, meanwhile, was up 8% year on year to $6.17 billion (€5.53 billion), while onshore-wind order intake also grew from 1.66GW to 5.33GW.

"Our renewable-energy business has significant long-term potential, as evidenced by the strong orders growth in the quarter," said the business unit’s CEO, Jérôme Pécresse.

Siemens Gamesa

Siemens Gamesa works on an October-September financial year so reported its Q3 results. However, for the period of January to June, it saw its net profit halve, from €44 million in the same period of 2018 to €21 million in 2019.

The Spain-based manufacturer said price cuts installed at the start of the financial year were still dragging down profitability.

Difficulties in project execution in India and northern Europe also resulted in higher costs, the company added.

It predicted a concentration of onshore-wind activity in the final quarter of its financial year (July-September).

Nordex

Germany’s Nordex posted a net loss of €55.4 million for the six months to the end of the June 2019, compared with a net loss of €40.3 million a year earlier.

The higher loss was due to the company spending more on personnel costs and "other operating expenses" during H1 2019 than it did a year ago, as it ramped up turbine and blade production in anticipation of a busier second half of the year.

Nordex invested €47.1 million in property, plants and equipment in the first half of the year, more than double its outlay in the same period a year ago.

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