More red ink on the bottom line -- Repower hopeful

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While reporting another sharp dip into the red -- with a deficit before interest and taxes (EBIT) of EUR 12.7 million for the first half of 2005 -- Germany's Repower is confident its restructuring and cost cutting plan is working. Although operating losses are down a further EUR 4 million on the EUR 8.8 million deficit reported in the first half of 2004, the company notes turnover is up 85% from EUR 65.7 million in the first half of 2004 to EUR 121.5 million in the same period this year.

Moreover, with turbine orders for 2005 reaching record levels, it is forecasting improved year-end results compared to 2004 and a "return to the profitable growth track" next year with 2006 EBIT predicted to be in the "double-digit million euro" range.

The decline in the first half year's operating result is largely due to "non-recurring effects from ongoing restructuring," says Repower. These include higher personnel expenses to cover a "re-alignment" of management, fees for establishing a new organisational structure, and reversal of unprofitable project orders. In addition, it says the "usual seasonality" in its home market, where installations are concentrated in the last few months of each calendar year, has not helped.

Sales, though, are picking up. In the first six months, Repower supplied 69 turbines with a combined capacity of 123.5 MW. As of the end of June, Repower reports orders on its books for 652.5 MW, or 350 turbines (including those already sold), with "at least" 200 of those scheduled for delivery this year and 100 to be installed in the first half of 2006. Around 80% of its business in 2006 is expected outside Germany compared with around 60% in 2005. Orders on the books are from France, the UK, China, Japan and Portugal.

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