GE says wind business could 'run hot' ahead of PTC expiry
General Electric chief executive Jeff Immelt says the wind business "could run hot" this year ahead of the end of the production tax credit in the US.
Citing the company's product offering, market share and "a ton of activity there right now", Immelt struck a bullish tone, but also expressed some uncertainty.
"Wind is just a wild card given how much volume could actually take place in 2012, just based on the strength of the market," Immelt says, discussing the business' impact on profit margins during GE's first-quarter conference call.
The company took in new orders for 696 wind turbines in the first quarter, up 113% from the year-earlier period. Orders in GE's renewables business were worth $1.5bn, up 59%. Wind orders pricing declined 1.5%.
Chief financial officer Keith Sherin called that level of orders "tremendous".
"The US market is very robust... The production tax credits end by the end of the year, and we're taking a really good share in the marketplace," he says.
The executives did not comment on the US market in 2013, when the expiration of the production tax credit -- the wind industry's key incentive -- is likely to cause a precipitous decline in new installations.
GE wind turbine shipments in the first quarter were up 67% to 611 units, contributing to renewables revenues of $1.5bn, up 30%. The sales price of renewables equipment shipped in the quarter was down 4%.
Overall, GE took in $35.2bn in the quarter from continuing operations, down 8%, and recorded operating earnings of $3.6bn, up 1%. Operating earnings per share were $0.34, up 3% from the year-earlier period. Normalized for the impact of one-time financial items, earnings per share increased 17%.
GE's bullish outlook for natural gas-fired turbine sales reflects the global trends for the wind industry's top competitor. "Almost everywhere in the world, people are moving to gas," Immelt says. In the US, he adds, growth in electricity demand will come eventually and that new load will be served by gas.
In the quarter, however, gas turbine orders were down to 23 from 27 a year earlier.