Wind Turbine Manufacturer Back in the Black
Spain's Gamesa returns to profitability and reports 7 million euro in profit in the first quarter of 2013.
In a complex economic and industry situation, marked by falling demand and pressure on prices, Gamesa advanced with the commitments made in its business plan:
Key figures 1Q 2013 (vs. 1Q 20121):
• Revenues: 491 million euro (-12.2%)
• 446 MWe (-12.5%)
• EBIT: 22 million euro (vs. -14 million euro in 1Q 2012)
• EBIT margin: 4.4% (+6.8 p.p.)
• Net profit: 7 million euro (vs. -19 million euro in 1Q 2012)
• NFD: 729 million euro (-29.6%)
• NFD/EBITDA: 2.8x
• Working capital/Group revenues: 25% (vs. 39% 1Q 2012)
Sales and orders
Group revenues amounted to 491 million euro in the quarter (-12% vs. 1Q 2012). At 446 MWe, sales were in line with the 2013 guidance (1,800-2,000 MWe) but were 13% lower than in 1Q 2012 due to the slowdown in demand, particularly in the US and China, and the strategy of controlling working capital by aligning manufacturing to deliveries and receipts. Latin America and the Southern Cone accounted for 53% and remain as the company's main growth driver. Europe and the rest of the world contributed 20%, India 17%. The contribution by the US (8%) and China (1%) declined in the quarter.
New firm orders amounted to 228 MW in the first quarter and accounted for 67% of sales guidance for 2013. The reduction in order intake (-67%) reflects the decline in demand in the US (which accounted for 50% of the volume in 1Q 2012) and China, and the slowdown in projects in Europe and India due to regulatory volatility. However, the strategy of commercial diversification and the drive into emerging markets resulted in 278 MW of new orders in April, i.e. more than in all of the first quarter, boosting coverage of the guidance to 74%.
Revenues in the Operation and Maintenance (O&M) division increased by 18% to 86 million euro, while MW under maintenance increased by 12% (19,513 MW); accordingly, this unit increased its contribution to recurring revenues while profitability rose faster than MW under maintenance.
Profitability
The business plan enabled the company to return to profit. Gamesa ended the quarter with 22 million euro in consolidated EBIT and a 4.4% EBIT margin (vs. -2.4% in 1Q 2012). Despite the lower business volume and decline in sales, profitability ratios improved due to the enhanced project mix, the contribution by O&M, higher productivity, and the reduction in fixed costs (-26%), once 100% of the savings measures under the business plan had been implemented.