Despite increased sales in the first quarter, Gamesa reports that it took a loss during the period. The company attributes the results to the complex economic environment, volatility in many of the main wind markets, new product launches and the industry's seasonality.
Gamesa says its market and business diversification, as well as the synergies between the wind turbine and wind farm activities, enabled it to increase sales in the period, with a record growth in turbine order intake (+136%, 687 MW) and to accelerate the strategy to monetize wind farm development and sales, primarily with the sale of 480 MW in the U.S.
Gamesa obtained consolidated sales of 777 million euros (+33%) in the first quarter, driven mainly by wind farm development and sales, which offset the performance of its wind turbine division, which was affected by the decline in activity in China and India and the gradual alignment of manufacturing to deliveries.
In the first quarter, Gamesa sold 510 MW. Latin America has been the main growth driver so far this year, accounting for 30% of the megawatts sold in the first quarter, followed by the U.S. (27%), India (19%), Europe and RoW (19%) and China (6%).
Wind turbine order intake accelerated, expanding by 136% to 687 MW in the first quarter of this year, compared with 291 MW signed in the first quarter of 2011. Gamesa's pipeline stood at 1.776 GW (+4%) at the end of March.
The macroeconomic and industry situation, growing price competition (mainly in China), and the costs of implementing new platforms worldwide had a temporary impact on the group's profitability, Gamesa says. Earnings before interest and taxes (EBIT) totaled -5 million euros, and net profit amounted to -21 million euros.
As a result, the EBIT margin was -0.6%, including 2 million euros in restructuring costs. The decline in the wind turbine EBIT margin (-3%) was offset by greater returns in the wind farm development and sales area, which obtained EBIT of 3 million euros, compared with zero in the first quarter of 2011.
Gamesa expects the profitability of the wind turbine area and of the group to gradually recover in the coming quarters, especially in the second half of the year, due to a progressive rebound in activity, a smaller impact of new platform launches and the effects of new cost-optimization measures.
Gamesa continues to focus on controlling its capital expenditures, which totaled 50 million euros for the wind turbine area in the first quarter. The money was used to open new plants in India and Brazil, adapt G97-2.0 MW production capacity in four different regions, and pursue research and development in new onshore and offshore platforms.
The group's net financial debt amounted to 1.035 billion euros at the end of March, which is attributable to the acceleration in the construction of wind farms with delivery scheduled for this year, the company says.
Gamesa's operation and maintenance services business obtained 73 million euros in sales in the quarter, and added reconditioning services for large components in Europe, for both Gamesa and third-party technology.
The company's wind farm development and sale business currently has 720 MW signed for delivery in 2012 (six times the 2011 figure). Gamesa says the completion of those deliveries will have a notable impact on the company's balance sheet, providing this division a free cashflow of 200 million euros and reducing the division's debt to 250 million euros.
Gamesa has a total of 834 MW in the final phases of construction and commissioning, primarily in Poland (152 MW being commissioned, with sale agreements) and the U.S (150 MW under construction and 130 MW being commissioned, all covered by sale agreements).