Gamesa recovers pace of order intake in Q3 2010 and maintains profitability in a complex context for the economy and the industry

o Firm orders in Q3 increased fivefold (compared with Q3 2009) to 1,186 MW; triple the Q2 2010 intake:




  • New order intake for delivery in 2010 increased fivefold, to 584 MW, and orders for delivery in 2011 rose sixfold, to 602 MW

  • Sales coverage in 2010 is already 93%


o By November 2010, Gamesa had met 100% of its guidance for the year, with wind turbine order of 2,450 MW, and 33% of its guidance for 2011, with orders of 982 MW
o Main consolidated figures for M9 2010:




  • Revenues: 1,786 million euro (-28%)

  • EBITDA: 201 million euro (-30%)

  • EBIT: 75 million euro (-46%)

  • Net profit: 25 million euro (-71%)

  • Debt: 297 million euro (down by 420 million euro). NFD/EBITDA ratio: 1.0

  • Wind turbine capex: 87 million euro


o The Wind Turbine business remained profitable, with an EBITDA margin (12.8%) and an EBIT margin (5.4%) at the high part of 2010 guidance


o Wind turbine sales totalled 1,600 MW: 93% outside Spain, the core markets being Asia (38%) and the US (22%)  


o Services: revenues expanded 58% to 227 million euro


o Development and sales of wind farms performed positively due to the plan to realise value in the portfolio and the revival in construction


o Major events in recent months include the presentation of the Business Plan 2011-2013 and progress in the offshore market (agreement with Northrop and installation of the global offshore wind business centre in the UK, with an investment of 150 million euro)


Madrid/Zamudio, 11 November 2010. Gamesa landed 1,186 MW of new orders in the third quarter of 2010, more than five times the intake in the third quarter of 2009 and three times the intake in the second quarter of 2010. Sales coverage for 2010 (2,290 MW of firm orders) was 93% at the end of September. By November 2010, Gamesa had met 100% of its guidance for the year, with orders of 2,450 MW.


Together with the recovery in the pace of order intake, driven by a new sales strategy and the opening of 10 new markets in one year, Gamesa has continued to focus on maintaining profitability and a solid financial position, enabling it to maintain guidance for 2010: the EBIT margin from the wind turbine business was 5.4%, the wind turbine working capital/sales ratio was 19%, and net consolidated debt totalled 297 million euro (after reducing it by 420 million euro), leading to a net debt/EBITDA ratio of 1.0.


Consolidated revenues amounted to 1,786 million euro, attributable to less activity against a complex macroeconomic and regulatory backdrop, sharp seasonal fluctuations expected this year, and the company's policy of aligning production with customer orders and delivery schedules.


The Cost Improvement Plan saved close to 100 million euro in M9 2010, partially offsetting price pressure, and enabling the wind turbine division to obtain an EBITDA margin of 12.8% and an EBIT margin of 5.4%, at the high end of guidance for 2010 (4.5%-5.5%), despite the lower absorption of structural costs due to the lower level of activity.


The positive trend was visible in the wind farm development and sale division, which reported key figures in positive territory (EBIT of 4 million euro at September 2010).


Gamesa's consolidated EBITDA amounted to 201 million euro (-30%), EBIT to 75 million euro (-46%) and net profit to 25 million euro (-71%) in the period.


2010 guidance fully covered and 2011 guidance covered 33%


The guidance published for 2010 is supported by performance of the wind turbine business, the upswing in order intake, and the positive trend in profitability in the wind farm business.


According to Gamesa, the strength of the recovery in industry demand continues to be shaped by different factors such as the speed at which new renewable energy support plans are presented in Europe and federal energy legislation is passed in the US, and also by the pace of the recovery by the broad economy and energy demand.


Gamesa presented a volume guidance of 2,800-3,100 MW for 2011, which was already 24% covered in September 2010 (the degree of 2010 sales coverage that had been attained by the end of September 2009 was 4%), and 33% covered in November 2010 (982 MW of orders).


Additionally, the company estimates EBIT margins of 4%-5% in the wind turbine division, i.e. practically stable with respect to 2010, despite estimated capacity restructuring expenses in Spain (c.10 million euro in 2011) and the impact on costs of launching new products and industrial platforms.


93% of revenues come from outside Spain: an increasing contribution from growing areas


Gamesa attained sales in the period of 1,600 MW and a record level of third-quarter deliveries, 1,138 MW (+51%), confirming the strong seasonal fluctuations expected this year.


The company continued to pursue its internationalisation strategy: international markets accounted for 93% of MW sales in the period, compared with 71% in M9 2009.


There is a growing contribution from the main growth countries: China doubled its share of sales, accounting for 29% of the total (14% in M9 2009), and India accounted for 9%. The US share continues to grow, accounting for 22% (17% in M9 2009), the rest of Europe accounted for 26% and the rest of the world for 7%. Significant decline in Spain's weighting among Gamesa's strategic markets: it accounted for just 7% of revenues, compared with 29% in M9 2009.


Gamesa continues to strengthen its O&M services area, which increased sales by 58% in M9 2010 to 227 million euro, compared with 144 million euro in the same period last year.


The company continued its capex optimisation policy, amounting to 87 million euro in M9 2010, which includes expenditure linked to: manufacturing of the G10X-4.5 MW; increasing capacity in India for the G5X turbine; the creation of new manufacturing capacity for the G8X-2 MW in China; and commencement of construction of two new plants in China (Jilin and Inner Mongolia).


In China, it recently announced new wind turbine supply contracts with Guangdong Nuclear Wind Power, Datang Renewable Power and Henan Weite Wind Power for a total capacity of 251 MW.


Wind farm development: profitability, greater visibility and monetisation


The wind farm division's results reflect a revival of wind farm construction and sales, enabling it to contribute positively to group earnings, with EBIT of 4 million euro.


Gamesa clinched new wind farm sales agreements in the third quarter in Germany (45 MW), Italy (26 MW), France (10 MW) and Mexico (26 MW). It also delivered 439 MW and managed the confirmed sales of 92 MW, which have already been monetised, enabling it to end the first nine months with a significant improvement in financial debt, which was reduced by 345 million euro compared with the same period last year.


Gamesa had 784 MW in the final phases of construction and commissioning at 30 September 2010, including the construction of its first wind farm in the US (38 MW), after two years, evidencing revival of the wind farm business in that country.


Gamesa continues expanding its development pipeline in China together with local partners. The company recently extended its contracts by 276 MW-adding 126 MW with Guandong Nuclear in Shandong province and 150 MW with Huadian in Inner Mongolia-increasing its joint development pipeline to 2,146 MW.


The wind farm backlog (22,268 MW worldwide) continues to gain visibility, increasing probable and practically certain MW, which account for 48% of the total. The company maintains its development strategy and efforts to monetise its portfolio.


Business Plan 2011-2013 and commitment to playing a significant role in the offshore market


On 7 October, Gamesa presented its Business Plan 2011-2013, which focuses on three strategic vectors: Cost of Energy (CoE), growth and efficiency. Gamesa will reduce its customers' cost of energy by 20% in 2013 and by 30% in 2015. This reduction will be attained by enhancing reliability, efficiency and availability of Gamesa's present and future product portfolio; 1.5 million engineering hours per year have been budgeted for this task and R&D staff numbers have been doubled through 2013.


Under the Business Plan, Gamesa expects to progressively restore growth and sell 4,000 MW of wind turbine generators by 2013 (+15% compound annual growth rate). This division's EBIT margin is currently 6%-7%.


Gamesa announced a period of intense capex aimed at the global expansion of its operating capacity and also at technological leadership (5 new onshore/offshore product families); it also plans to increase its local presence by opening up 24 new offices, grow in the main wind markets worldwide and increase its industrial presence in areas of growth (India and Brazil) and countries with considerable wind resources (China and US).


A few days later, Gamesa announced that it had chosen the UK to be the centre of its offshore wind business, with plans to invest over 150 million euro by 2014 on the installation of an offshore technology centre and the construction of a blade manufacturing plant. The company is also planning on developing its offshore port logistics operations from different UK ports, and it will also provide WTG O&M services nearby. Gamesa's offshore wind business headquarters will be in London.


The company is designing and developing 2 families of offshore turbines (5 MW/6-7 MW) based on proven technology that was validated by the G10X-4.5 MW turbine. The first two prototypes of its G11X-5.0 MW turbine will be tested in the last quarter of 2012, and the pre-series will be ready in 2013.


Gamesa reached an agreement with Newport News Shipbuilding, the business division of Northrop Grumman Corporation, a leading US defence contractor and America's largest shipbuilder, to work together on offshore wind technology.

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