Update: Q1 loss widens at AMSC

AMSC’s net loss for its financial first quarter ending 30 June widened to $13.5m from $10.5m a year earlier, as revenue halved partly due to weak activity in the company's China wind business.

AMSC closed in New York down 13.5% to $1.73 per share despite assurances from executives that $11.7m in quarterly revenue was at a “low point” for the new fiscal year.

The US company is pinning its wind technology division’s turnaround hopes and future profitability on future order growth from licensees in China and India, and a new 2MW turbine design.

AMSC has struggled to regain momentum since 2011 when it broke ties with Sinovel, formerly its largest customer and now bitter adversary in a protracted and slow-moving legal battle in both China and the US.  

A US grand jury in July 2013 charged Sinovel, two of its executives and a former AMSC subsidiary employee in Austria with stealing trade secrets from the Massachusetts-based company.

AMSC is pursuing Sinovel for alleged intellectual property theft and breach of contract in a $1.2bn action centering on power-electronics software code, part of the electrical control system used in wind turbines, plus payment for contracted deliveries.

AMSC chief executive Dan McGahn had little to report on the legal front in a conference call with analysts.

With Sinovel’s exit, AMSC’s China wind strategy has focused on expanding commercial ties with much smaller players who are reliant on the US company’s turbine technology.  JCNE is the key licensee and its wind project development arm has had modest success.

McGahn says that JCNE has won a project contract with one of China’s big five state-owned power companies – he provided no detail - and this may result in some turbine electrical  control and systems business for AMSC this year.

For now, JCNE is still working down AMSC inventory for the US company’s 2MW wind turbine design. AMSC is also helping with JCNE to develop 3MW and 5MW turbine designs, although McGahn offered little to suggest they would be meaningful revenue generators in China anytime soon.

In India, licensee Inox has about 13% of the wind turbine market. Inox, a subsidiary of Gujarat Fluorochemicals, in June gave AMSC its sixth and largest order for 2MW turbine electrical control systems worth $40m.

Inox, much more than JCNE, would appear to have potential to gain scale in another of the world’s larger emerging wind markets.  Inox last month got approval from capital market regulator SEBI to launch an initial public offering.

Inox expects to complete 500MW – 250 turbines – in orders during the fiscal year ending 31 March, and now has a 750MW backlog.

AMSC expects that its new 2MW turbine design for low wind regimes has excellent application in both China and India. The company claims when paired with a 113-meter rotor it will deliver nearly 20% more energy than the existing 2MW turbine design with a 93 meter rotor.