GE Renewable Energy lost more than $300m in the first quarter of the year, partly down to Covid-19 disruptions, as parent group General Electric flagged “headcount/cost reductions” at the division.

The Paris-based renewables unit lost $302m in the January to March period, widening 61% from a deficit of $187m at the same stage last year.

GE said the increased loss was “mainly driven by the non-recurrence of a non-cash gain in the first quarter of 2019, supply chain disruption due to Covid-19, and fulfillment delays, partially offset by higher onshore wind volume”. Orders fell 13% to $3.1bn but revenue grew 26% to $3.2bn, mainly driven by onshore wind in the US.

Deliveries of wind turbines totaled 731, more than double a year earlier, and re-power kits 219, up 40%. Revenue for onshore services, a solid growth segment in the wind market, rose 15%.

CEO Larry Culp said it was encouraging to see pricing improved 1% during the quarter for turbines but he cautioned that renewables are "by nature a very low gross margin business."

Covid-19 has clouded the outlook in the US onshore wind market, by far the largest for GE where it now leads Vestas by more than 10 percentage points.

On 1 January it had been named preferred turbine supplier for about 12.8GW of capacity under construction or in advanced stages of development there, according to the American Wind Energy Association, a trade group.

How much of that capacity will get built is unclear given expiring federal tax credits, and pandemic-related financing uncertainties, permitting delays and supply chain disruptions.

In an update to investors of the current situation, GE said two of subsidiary LM Wind Power’s blade factories – one in India, one in the US – are closed with another three at 50% capacity. The company is monitoring the onshore wind market for potential permitting and construction delays.

However, GE Renewable Energy’s China operations are now running at normal levels again.

A slide from a GE Q1 presentation to investors flags “headcount/cost reductions” at GE Renewable Energy, without giving further details. The renewables unit earlier in April announced the closure of an LM Wind Power plant in Arkansas with the loss of 470 jobs, citing reduced demand for the blades made there.

The OEM said certification of its 12MW Haliade-X, the world's largest wind turbine, is "on track" for a scheduled 2021 commercial launch. It is working to financially close several deals but did not provide details. GE sees Haliade-X as a leader and a big money-spinner in the fast-growing global offshore wind market.

GE last year broke into the promising early-stage US offshore wind market with 1.2GW in Haliade-X orders but developer Orsted now sees longer timelines for both its 120MW Skipjack and 1.1GW Ocean Wind projects off Maryland and New Jersey due to Covid-19 impacts and federal permitting delays.

Haliade-X will also equip the 3.6GW Dogger Bank project in the UK, the world's biggest offshore wind project.

Culp said efforts were in the early stages to turn around the hydro and grid business - a major underperformer and loss-leader, in part because of how contracts were underwritten by Alstom, which GE acquired last decade.

The focus across renewables is on daily execution at factories and in field service organisations, improving project execution and contract underwriting framework, said Culp.

Culp told investors the Covid pandemic “materially challenged our first-quarter results”, with the aero engines unit especially hard hit by the collapse in air travel.

The group will target $2bn of cost-outs and $3bn “cash preservation” to mitigate the impact, said Culp, who said: “The second quarter will be the first full quarter with pressure from Covid-19, and GE expects that its financial results will decline sequentially.”

Culp added: “While there are many unknowns, there will be another side—planes will fly again, healthcare will normalise and modernise, and the world still needs more efficient, resilient energy.”

Wind

GE Renewable Energy slumps to $300m loss as Covid-19 hits first quarter