Gamesa wind energy doubles profit as wind turbines sales surge

Gamesa Corp. Tecnologica SA (GAM), Spain’s biggest wind power maker, said net income almost doubled in the first half on surging sales.

Revenues increased by 13%, to €1,262 million, driven by growth in sales of wind turbines and services. The increase was 21% at constant exchange rates.

Gamesa ended the first half of 2014 with €42 million in net profit, almost twice the 1H13 figure (€22 million). This increase strengthens the growing trend in profitability, with an EBIT margin of 7.7% at constant exchange rates, and in revenues, which increased by 21% at constant exchange rates.

These results are at the high end of 2014 guidance, as set out in the Business Plan, and improve the future outlook. The €71 million reduction in debt in the last twelve months also represents progress towards the sound balance sheet target.

Key figures in 1S 2014 (vs. 1S 2013)
Revenues: €1,262 million (+13.1%)
Sales (MW): €1,187 MWe (+24.9%)
EBITDA: 158 million (+10%)
EBIT: 83 million (+26.1%)
EBIT margin: 6.5% (vs. 5.9%, +0.7 p.p)
Net profit: 42 million (vs. 22 million, +87.9)
Net financial debt: 549 million (-11.4%)


Increase in sales and production

The rising trend in revenues gained strength in the first half of 2014, to €1,262 million, 13.1% higher than in 1H13, supported by the increase in revenues in the wind turbine division (+12%) and in O&M services (+18%). At constant exchange rates, revenues increased by 21% in the period.

In a context of a recovery in global demand, wind turbines sales rose 25% with respect to 1H13, to 1,187 MWe, supported by Gamesa’s sound sales positioning (geographic, product and customer diversification).

This strategy enabled the company to sign orders for an additional 801 MW in 2Q14 (+31%), bringing the order book to 1,913 MW at the end of June, i.e. 24% more year-on-year, ensuring that Gamesa will reach the high end of the sales guidance for 2014 (2,400 MWe). Orders for an additional 393 MW signed in the first weeks of July help improve future growth prospects.

The US accounted for 20% of revenues, while emerging markets such as India and Latin America continue to play a leading role, accounting for 30% and 36%, respectively. Europe and RoW accounted for 13%, with prospects for an increase in their share in the second half of the year.

Operation & Maintenance (O&M) revenues (16.8% of the total) expanded by 18% in the first half of 2014, to €212 million, with an EBIT margin of 12.3%.

Sound finances and profitability

Gamesa obtained €42 million in net profit (+88%) and €83 million in EBIT (+26%) in the first half of 2014, providing an EBIT margin of 6.5% (vs. 5.9% in 1H 2013), i.e. above the guidance for the year (>6%). At constant exchange rates, the EBIT margin was 7.7%, very close to the range set out in 2015 vision (8%-10%). This steady improvement in the company’s profitability is due not only to growth in sales volume, but also to Gamesa’s effective strategy to optimise variable costs and improve fixed costs.

The company also strengthened the balance sheet, building on the improvements attained in 2013, supported by the strategy to control working capital (€418 million, 17% of revenues, compared with 22% in 1H 2013), focused capital expenditure (€56 million), and the sale of non-core assets. This enabled it to reduce net interest-bearing debt by €71 million in the first half compared with 1H 2013, to €549 million (1.8 times EBITDA). Debt was reduced by 41% even though production levels were similar to 1H 2012.


The positive order book performance, along with strong sales positioning, the steady improvement in product costs and greater regulatory visibility in key countries provide the assurance of profitable growth in the short, medium and long term.

The entry into the offshore segment via the joint venture with Areva provides Gamesa with an opportunity for complementary growth. Offshore wind installations are expected to account for one-third of the total in Europe in the next five years, reaching 45 GW installed worldwide by 2020.