Senvion loss widens in H1 on restructuring but order intake up

Revenues and operating profit at Senvion fell in the first half, while its net loss widened due to restructuring expenses, but the Germany-based turbine maker’s order intake surged thanks to firming offshore wind deals.

Revenues in the first half of 2017 fell to €829.6m ($975.1m) from €869.5m in the year-earlier period, as a rise in service and offshore revenues couldn’t compensate fully for a decline in onshore turbine sales that was triggered by collapsing onshore revenue in the Americas.

Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) fell to €61.8m from €72.3m a year earlier.

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The group’s net loss widened to €91.9m in the first half from a loss of €44m in the first half of 2016, mainly impacted by restructuring expenses of €52m.

Senvion earlier had announced it will cut 660 jobs globally, mostly from the closure of three German factories in Trampe, Husum and Bremerhaven.

After lengthy negotiations with the company's workers councils, the nacelle plants in Trampe and Husum are slated to be closed during the third quarter of 2017, while the Power Blades plant in Bremerhaven is scheduled to close before January 2018.

That will stabilise operational costs, chief executive Jürgen Geissinger said. Opex costs have already fallen by 22% to €35m in the second quarter from the year-earlier period.

Order intake up

On the upside, Senvion said its firm order intake rose steeply to a value of €587m in the second quarter of 2017, up from €284m in the second quarter of 2016, and €353m in the first quarter of 2017.

The rise came mainly thanks to two offshore wind orders, for the 203MW Trianel Borkum 2 array in the German North Sea, and a 30MW order for Italy’s first offshore array in the Mediterranean.

Senvion CEO Geissinger despite the decline in operating profit was upbeat, saying the company’s performance was in line with expectations amid a challenging environment.

“We have been making progress in shaping our company for the future in times of fast decreasing levelised costs of energy (LCoE) as many markets shift to auction-based systems. Our order intake is growing and we continue to introduce products successfully,” Geissinger said.

He also pointed to the 299MW onshore wind order from Chile announced this week that is likely to firm in coming months and will swell the turbine maker’s order intake further.

Another big win for Senvion was the 429MW Murra Warra wind project in Australia’s Victoria state for which the company was lined up in June. 

Senvion expects the order - its largest onshore order to date - to firm soon, and Geissinger confirmed the manufacturer's guidance for a €2bn firm order intake for the full year of 2017.

The Austrialian order alone could account for about 40% of the company's onshore revenues by 2019.

That could offset the weakness of other markets, such as India, where too low auction results have made developers shy away from bids.

"We have a very good pipeline on conditional orders," Geissinger said, adding that the Latin American market was going forward, while Senvion also expected some additions to come up in its Nordic pipeline.

Updates to add detail on plant closures, order intake