Bottlenecks constrain growth -- Gamesa's first nine months

Company results from Gamesa for the third quarter of the year are a mixed bag. Total group sales over the first nine months are 59% up on the same period last year at EUR 2206 million -- EUR 125 million from solar activities and the rest from wind turbine and wind farm sales. Yet sales performance decelerated over the third term, 15% down on sales in the second quarter.

Over the first nine months, Gamesa profits are down 57% to EUR 94.6 million compared with the same period a year ago, though a dip had been expected given that the 2006 figure was bloated from the sale of Gamesa's wind plant service division.

For Gamesa's CEO, Guillermo Ulacia, the true performance indicator is operating cash flow, or earnings before interest, taxes, depreciation and amortisation, which is up 26% to EUR 284 million for the first nine months, though the figure dipped slightly in the third quarter over all business areas.

Faster than expected

Increasingly tight global supply of key turbine components lies behind the third term deceleration, says Gamesa. The company is currently ramping up production at new factories in China and the United States. Both those markets have experienced faster growth than expected, says Gamesa's director general, Iñigo Giménez.

The company has increased its annual factory production capacity by 800 MW so far this year, bringing total capacity to 3000 MW, further stretching its supply chain. Since the summer, the company has increasingly focussed on strategic alliances with component firms to ease the bottlenecks. Even so, for the final three months of 2007 Ulacia expects "greater delivery and installation risk level."

Sales from Gamesa's turbine division came in at EUR 1951 million over the first nine months, 67% up on the same period last year. Translated to installed capacity, the company sold 2311 MW over the period, 57% up. The speed at which orders are completed has increased, with 1718 MW installed, or 26% of the capacity ordered, compared to 9% over the same period in 2006. Ulacia reports orders secured for 7000 MW for 2008-2010, "with more than 90% signed with key strategic clients."

Sales of completed wind plant by Gamesa's project development division are 22% up on the first nine months of 2006 at EUR 266 million for the year so far. In terms of capacity, sales were 59% up, at 322 MW. Underlining Gamesa's increased internationalisation, a key strategy, Spain accounts for 33% of wind plant sales, down from 52%. The US and Germany make up 26% and 23%, respectively.