Dive Brief:
- GE Renewables on Wednesday reported a $184 million loss for the second quarter of 2019, a hard turn from the $85 million dollar profit it showed in the same period a year ago.
- The company cited a range of factors for the loss, including increased research and development spending and project execution issues in the Asia Pacific region. But orders totaling $3.7 billion were up 35%, year-over-year, and revenues hit $3.6 billion — up 26% year-over-year.
- GE Power, which focuses on power generation and transmission, remains in the black, but saw segment profit decline to $117 million in the second quarter compared with $410 million the year before.
Dive Insight:
GE Renewables' fall this quarter follows another $162 million loss in Q1 of this year, but company officials point to a range of positive factors — from technology advances to improved pricing and revenues — as signs that the company remains in good shape.
The business "has significant long-term potential, as evidenced by the strong orders growth in the quarter and continued growth of our backlog," GE Renewable Energy President and CEO Jérôme Pécresse said in a statement.
He also pointed to improved pricing for onshore wind, international deals announced in the second quarter, and progress on multiple technology initiatives. Pécresse also noted that this is the first quarter GE Renewables included financial results for the company's grid solutions business, which provides utilities around the world with equipment and services to manage their grids.
"Looking forward, we see a good level of activity for 2021 projects in the U.S. despite the lower value of production tax incentives," Pécresse said, referring to the expected phaseout of renewable energy tax credits.
The company said the quarterly loss was driven by joint venture consolidation, higher losses on legacy contracts, "challenging onshore project execution in Asia Pacific," increased research and development investment, tariffs, and pricing. Some of that was offset by cost productivity and strong volume.
GE is continuing to develop "two major new products," its new onshore wind turbine platform "Cypress" and its offshore system "Haliade-X." Both are moving toward commercialization — the company says Cypress has secured orders, while Haliade-X is undergoing blade testing.
GE also secured more than 4 GW in U.S. onshore wind orders in the first half of the year, which it said shows continued strong demand for the company's 2 MW platform.
Orders in GE's power division hit $4.9 billion in the second quarter, down 22% compared to Q2 2018. Revenues of $4.7 billion were down 25% from the year before.
"Gas Power revenues and margins declined, principally driven by lower volume and mix," the company sad. "Gas Power fixed costs were down 10% from the same period last year. The team continues to focus on reducing cost and improving operations."
