Gamesa presents its Business Plan 2013-2015 today, with the goal of addressing the immediate situation while laying the foundation to emerge stronger, in a position of leadership in the wind industry, through the following strategies and actions (More documentation):
- recovering and maintaining profitability, reducing fixed and variable costs (structure size and an industrial and procurement strategy), while maintaining the flexibility needed to continue growing;
- strengthening the balance sheet by reducing debt (control of working capital and capex), supported by a new model of managing the wind farm development and sale business, which will enable the company to continue operating this business without consuming equity;
- focusing on key growth markets and segments: operation and maintenance (O&M) services;
- responding to demand and continuing to offer competitive technology solutions (Cost of Energy): launch of two new platforms — 2.5 MW and 5.5 MW.
This plan will produce a flexible, results-oriented company that will be able to operate profitably while it continues to prepare for future growth, in an economic and industry context dominated in the short term by contraction in its traditional markets, the impact on project execution of grid restrictions in China, and surplus manufacturing capacity, which is putting pressure on margins. In the medium-long term, Gamesa sees the wind power industry as having a solid future supported by its efficiency, in terms of Cost of Energy, and its contribution to solving energy systems’ structural problems: dependence, price volatility, inefficient use of resources and environmental impact.
Gamesa is undertaking a worldwide rationalisation process to adapt to the slowdown in demand and to attain an efficient operating model that guarantees a competitive level of fixed costs.
The process, which commenced early in 2012, includes an overall reduction in the workforce between October and the first quarter of 2013 of around 1,800 jobs (20.2% of the worldwide total), both structural and operational, mainly in Europe, China and the US. At the end of the process, the company will have a global headcount of 6,200-6,300.
In Spain, Gamesa will trim approximately 500 jobs (10.9% of current employee numbers in Spain). Meetings with union representatives are scheduled for the near future to discuss the implementation of this process as well as the labour plan. As a result, the Spanish headcount will maintain the same proportion to the total as at the beginning of this process; reinforcing its position as the group’s technology hub as well as a global production and supply hub, along with China.
This rationalisation guarantees a flexible structure, and greater resource assignment to growth areas and contact with clients: Operation and Maintenance services, and the commercial and projects area, in response to the goal of capturing future market growth. In pursuit of operational excellence, Gamesa will reallocate technology and quality resources to the operations area (industrial process), concentrating technology resources where the know-how is located: Spain will strengthen its position as the company’s global technology hub.
The company expects to sell 1,800-2,000 MW in 2013, and envisages¹2,200-2,400 MW in 2015, with a shift in demand towards emerging markets, mainly Latin America (which will account for 40%), and a notable improvement in profitability (EBIT margin: 3%-5% in 2013; 8%-10% in 2015) while remaining committed to a sound balance sheet and cash flow in the period.
¹ This does not constitute a guidance or commitment on the part of the company; rather, it is merely an outlook.
Production and supply strategy focused on improving the cost of energy. New 2.5 MW and 5.5 MW platforms
Operating excellence and optimisation of variable costs are the basic pillars of the plan and are supported by, among other measures, tailoring capacity to demand and standardising components and manufacturing processes; maintaining a global supply chain and maximising the supplier chain in Spain and China; and continuing to improve competitiveness.
Gamesa will focus its resources on developing two new platforms: 2.5 MW, as from 2Q 2014, and 5.5 MW (for onshore and offshore), as from 4Q 2014, the goal being to meet market needs (95% of demand in the next few years) and reduce the CoE.
Gamesa remains committed to the offshore wind market, while adjusting investment to market trends. The company will have a certified prototype in late 2013-early 2014 and expects to develop 7-8 MW platforms in the medium-long term. The company will maintain alliances with industrial and financial partners with a view to sharing financing needs in this segment.
New wind farm development and sale model, without consuming equity, and growth in O&M services
The wind farm development and sale division-which sets Gamesa apart in the industry, having developed more than 5,000 MW of farms with its own technology and attaining average sales of 500 MW per year (2008-2012)-will continue to be a decisive area for the company going forward, providing a sales channel for wind turbines, opening new markets and attracting new clients. The division will use a new management model which will enable it to develop wind farms and ensure its role as a technology leader without consuming equity or drawing on external financing vehicles and allowing for a reduction in debt and working capital.
In O&M Services, which has 18,200 MW under maintenance, Gamesa will strengthen its position as a technology leader as the foundation for growth (+34% in 2015 vs. 2012) and will focus on segments with greater value added (Risk and Full).