Gamesa increased earnings in 1Q 2014

Gamesa ended the first quarter of 2014 with17 million euro in net profit, more than double the figure of 7 million euro posted in the same quarter last year.

These figures reflect the improvement in profitability, with an EBIT margin of 6% (up from 4.4% in 1Q 2013), and the return to growth in business volume and revenues.

These results, in line with the guidance under the Business Plan, reaffirm that Gamesa is back on the path to growth in both business volume and profitability.

Key figures in 1Q 2014 (vs. 1Q 2013)

Revenues: 573 million (+16.8%)
Sales (MW): 567 MWe (+27.1%)
EBITDA: 72 million (+47%)
EBIT: 34 million (+57.7%)
EBIT margin: 6% (vs. 4.4%, +1.5 p.p)
Net profit: 17 million (vs. 7 million, +2.4x)
Net financial debt: 655 million (-10%)

Growth in sales and rising business volume

Gamesa’s revenues amounted to €573 million in the first quarter of 2013, i.e. 17% higher than in 1Q 2013. This improvement is attributable to the sharp increase in wind turbine manufacturing (+16%) and O&M services (+21%).

Sales (567 MWe) were in line with the 2014 guidance (2,200 MWe-2,400 MWe), and 27% higher than in 1Q 2013, reaffirming the return to growth that began in the final quarter of 2013. This recovery was supported especially by the contribution to sales from India (33%) and Latin America (37%); the recovery in the US, which increased its contribution to 21%; emerging markets such as the Philippines, Turkey and Sri Lanka; and sales of the 4.5 MW-5.0 MW platform in Finland. Europe and Rest of World maintained their contribution (7%), which is expected to improve over the course of the year.

O&M services revenue expanded by 21.5%, to 104 million euro, and the EBIT margin was 12.8% (+28.8% vs. 1Q 2013). O&M services account for 18% of total group revenues.

This growth in business volume and sales was achieved in a context of rising global demand following the decline during 2013. Sound commercial and product positioning, geographic and customer diversification and a product portfolio focused on meeting market needs resulted in a doubling of order intake in the quarter, to 496 MW, bringing the order book at the end of March to 1,731 MWe (+20% vs. march 2013); consequently, the company has already covered 74% of budgeted business volume for 2014 (2,200-2,400 MWe).

Profitability and a strong balance sheet

In this context of growing demand, with a leaner fixed cost structure, Gamesa continued to improve profitability, leveraged on the variable cost optimisation programme.

The company ended the first quarter of 2014 with net profit of 17 million euro (+143%) and EBIT of 34 million euro, i.e. an EBIT margin of 6% (vs. 4.4% in 1Q 2013), in line with guidance for the year (>6%). At constant exchange rates, the EBIT margin would have been 6.6%.

Net financial debt declined by 10% year-on-year to 655 million euro at the end of March 2014. The company continues to focus on strict control of capital expenditure, ensuring a return on investment and a sound balance sheet, thereby reducing its funding needs.