United States

United States

Covid-19 sends GE Renewable Energy to $500 million loss in H1 2020

GE Renewable Energy’s losses widened to $498 million in the first half of the 2020, with the coronavirus pandemic hitting its supply chain and hindering project execution.

GE Renewable Energy turbines at Ørsted's Plum Creek wind farm in Nebraska, US. It was completed in June 2020
GE Renewable Energy turbines at Ørsted's Plum Creek wind farm in Nebraska, US. It was completed in June 2020

The technology giant reported a $195 million loss for its renewable energy segment in the second quarter of 2020 – down 6% from the same period a year ago. 

It also recorded a $498 million loss in the segment for the first half of the year – down 34% from the same period one year earlier.

This loss came as its order book and revenue decreased in the second quarter: orders fell 19% to just under $3 billion, while revenue dropped 3% to $3.5 billion respectively.

But GE Renewable Energy’s first-half revenue rose 9% to $6.7 billion, while its orders in the first six months of 2020 decreased 16% year on year to just over $6 billion.

The manufacturer explained that its Q2 orders shrunk due to slowing US onshore and grid orders during the pandemic.

Meanwhile, its revenues in the second quarter were mainly driven by onshore wind, with the manufacturer delivering 830 new turbines and 357 turbines for repowering projects between 1 April and 30 June.

GE Renewable Energy added that the $195 million loss in the segment was due to supply chain and project fulfillment disruptions associated with Covid-19 and quality-related costs. However, these were partially offset by the onshore wind price and lower project execution losses.

In a conference call, CFO Carolina Dybeck Happe told reporters that onshore wind markets continued to grow internationally and – due to the extension of the production tax credit – in the US.

Happe added that she believed the slowdown in orders in Q2 was not due to cancellations, but rather due to financing and permitting delays amid the coronavirus pandemic. She said that GE Renewable Energy expects orders to “increase sequentially in Q3”.

The CFO added that she remains hopeful that with GE securing a 5GW-plus order pipeline for its 12MW Haliade-X, the manufacturer can “capture cyclical growth through the decades” in offshore wind.

“We are making progress in our turnaround towards positive margins and free cash flow” in the renewable energy segment, Happe added.

While GE Renewable Energy reported a near-$200 million loss in the second quarter of 2020, the wider GE group reported a loss of $2.1 billion.

It also recorded losses in its capital, aviation and power segments in Q2 – of $1.4 billion, $680 million and power $40 million respectively. Meanwhile, GE recorded a $550 million profit in its healthcare segment in Q2.

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