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Gamesa Soars to Two-Year High on Return to Profit: Madrid Mover

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Gamesa SA Chief Executive Officer Ignacio Martin
Gamesa SA Chief Executive Officer Ignacio Martin said, “We are carrying out our strategic plan even a bit better than we had planned.” Source: Gamesa SA via Bloomberg

July 24 (Bloomberg) -- Gamesa Corp. Tecnologica SA, the Spanish wind-turbine maker that’s tripled in value this year, jumped to a two-year high in Madrid trading as an increase in sales overseas helped it return to profit.

Gamesa rose as much as 17 percent to 5.679 euros, the highest intraday price since June 20, 2011, and traded at 5.655 euros as of 4:02 p.m. local time. Trading volumes were more than double the three-month daily average.

The manufacturer, which supplies turbines to wind-power developers including Iberdrola SA, has invested in emerging markets such as Brazil and India as expansion in Europe and the U.S. is held back by government subsidy cuts and slowing demand.

“When you diversify markets you dilute risk,” Chief Executive Officer Ignacio Martin said today in an interview in Madrid.

Net income totaled 22 million euros ($29.1 million) in the first half of the year, compared with a 33 million-euro loss a year earlier, Zamudio-based Gamesa said yesterday in a statement. Net debt dropped by 11 percent to 620 million euros.

The company unveiled a program in October to cut expenses, reduce debt and eliminate about 1,800 jobs, and has already met a target to reduce fixed costs by 100 million euros this year. The overhaul put Gamesa back on the path to profitability, according to Martin. “We are carrying out our strategic plan even a bit better than we had planned,” he said.

Gamesa delivered a 6.9 percent profit margin in the second quarter, exceeding its target for the year.

“Gamesa continues to significantly improve its cost structure,” Ivan San Felix, an analyst at Renta 4 Banco SA in Madrid, said in a report. “Without a doubt, the company is on track to achieve its objectives.”

To contact the reporter on this story: Patricia Laya in Madrid at playa2@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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