Gamesa to Cut 20% of Its Workforce to Return to Profit
Gamesa Corp. Tecnologica SA (GAM), Spain’s biggest maker of wind turbines, said it will cut 20 percent of its workforce in a strategy aimed at reducing its size through 2015 and returning it to profit next year.
It will cut 1,800 jobs by March after having eliminated 800 positions since December, according to a statement from the company today. Gamesa expects turbine sales totaling 1.8 gigawatts to 2 gigawatts, compared with an estimate for 2 gigawatts this year.
Turbine makers led by Vestas Wind Systems A/S (VWS) are struggling with subsidy cuts across the U.S. and Europe, which have eroded margins and demand along with turbine prices. Gamesa reduced its 2012 sales forecast in July and said it would scale back after posting its first half-year loss since 2000. Vestas already fired 2,335 workers in January and reduced manufacturing to contain widening losses.
“We need to reduce costs and debt” Gamesa Chairman Ignacio Martin, who joined in May, said on a conference call from Madrid. “Utilities are going through a deleveraging stage and are reducing investment, which is affecting us.”
The company, which sold 44 percent of its turbines to utilities last year, expects a 12 percent drop in global installations to about 42 gigawatts next year. It forecast a shift in demand toward emerging markets and expects to sell more in the region, particularly in Latin America.
Gamesa shares closed 4.2 percent higher in Madrid trading at 1.60 euros. The stock has dropped 50 percent this year. Based in Zamudio, Spain, Gamesa is due to report third-quarter results on Nov. 8.
The company, which also develops wind farms, plans to reduce fixed costs by 100 million euros from 2011 to 2013 as it focuses in two new turbine models with 2.5 and 5.5 megawatts. It said that it is maintaining its commitment to offshore wind.
Gamesa sees the current oversupply of wind turbines increasing next year due to the more than 77 gigawatts in global manufacturing capacity. In response, it will close five manufacturing plants during 2012 and sees more closures by 2015.
“There is a surplus in industrial capacity of 50 percent, so sales prices are going to be affected,” Martin said today. He doesn’t expect turbine prices to rise next year.
Aided by a leaner and more flexible structure, Gamesa sees margins improving in the next few years. The company forecast earnings before interest and tax margin of 3 percent to 5 percent next year and an increase to 8 percent to 10 percent in 2015.
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