Debt stole profit from blade firm -- LM half year

Debt servicing in the first half of 2004 turned an operational profit of EUR 6 million to a loss of EUR 7 million at LM Glasfiber. Other than that, the news from the world's dominant producer of wind turbine rotor blades was good after a record bad year in 2003. Turnover in the first six months rose 57% to EUR 123 million from EUR 78 million in the same period last year. Profit on primary operations was EUR 6 million, compared with a loss of EUR 25 million in the first half of 2003.

PTC IMPACT

The hiatus in the United States market caused by the temporary loss of wind's federal production tax credit has been felt by LM, but not to the extent that it has impacted company expectations for the year. LM is still predicting an increase in sales of 23-30% compared with last year, to EUR 270-282 million, and a result for the year between a loss of EUR 6.7 million at most and a zero at best. Last year's loss before tax was EUR 40 million.

The largest hurdle for the company is the payment of interest on its debt, which although reduced from EUR 367 million to EUR 274 million during the past year still cost EUR 13 million to service in the first half year. Interest payments for the whole year are expected to be EUR 25 million.

busy ahead

By the end of June, LM had orders enough to keep it busy for six months and expects "to win substantial market share relative to 2003." Contrary to the expectations of Vestas, LM predicts that its market in Germany will continue to decline along with the Scandinavian market. On the other hand, LM expects to see substantial growth in sales to customers in southern Europe, India, China and Japan.

demand

During the first half of 2004, LM supplied 3246 blades for 1060 MW of wind power capacity -- an increase of 86% compared with the same period in 2003. Of these, 59% of blades were for turbines with a rated capacity of 1.5 MW or more. The smallest blades supplied were for 750 kW turbines, which made up 21% of sales compared with 14% in the first six months of last year. Demand for blades for smaller turbines on the Indian market lies behind the increase.

In the autumn, LM will install its first 61.5 metre blades on German Repower's 5 MW turbine, opening up the potential for rotors of 126 metres in diameter. Static tests on the blade are complete, says LM, with dynamic testing still taking place.