Company Year-end Financial Results: Sinovel Flies IPO, But Shares Slow on Debut

China’s number one wind producer Sinovel kicked off the year with its IPO in Shanghai marking the exchange’s first major listing of 2011. By setting its offer price at launch at the top end of the RMB80-90/share (US$12.35—13.69/share) range the company amassed RMB9.5 billion ($1.4 billion) in its 13 January listing.

The world’s third largest wind turbine manufacturer, which launched its products in 2005, offered 105.1 million shares in the listing, riding on the appetite for wind power in China – which is now the world’s largest installed wind capacity market with 41.8 GW by end-2010. Funds raised in the IPO will be used to expand the company’s installed capacity and for research and development, it said.

Despite the good pre-listing environment, shares in the company slid nearly 10% to the lower end of the forecast range at RMB81.31/share ($12.36/share) against its listing price when it debuted, but Sinovel investors were said to be unperturbed. A slowing annual growth rate in the Chinese wind sector to 20% in 2011 from about 25% in 2010 was said by some to be taking its toll.

Other Chinese wind manufacturers are unlikely to be deterred from listing in the future, however. Wind sector financing demand remains high, said analysts, and more IPOs can be expected.

Ahead of the Sinovel move, in the final quarter of last year, another Chinese wind energy company, Goldwind, announced that it too was to list, this time on the Hong Kong Stock Exchange. The company said its price of HK$17.98/share ($2.31/share) left the offering 41.19 times oversubscribed.

The initial offer price, excluding any revenues from its over-allotment option, would net the company HK$6.8 billion ($816 million) after costs, it said. Owing to oversubscription on the HK listing, the company enacted a clawback mechanism with the number of shares offered via Hong Kong increased to 30% of its global offering, approximately 11.6 million shares.

Speaking ahead of the listing, Goldwind chief executive Gu Wang said: ‘We are delighted to receive an encouraging response from the market in the global offering. Our entry to globally renowned indices before the listing will help enhance public awareness of Goldwind and attract buyers who follow the indices.’

Iberdrola Renovables

In its latest financial report Spain-based Iberdrola Renovables revealed its operating capacity had increased by 16.1% to 11.4 GW with a further 1.4 GW under construction, an increase of almost 1.6 GW on year. Of that 1.4 GW, 900 MW is set to be completed during the course of 2011. Meanwhile, its EBITDA had gained 25.3% to reach €1 billion and cash flow generation saw an increase of 30% to €741 million.

The company’s principal revenue generator by region was Spain, accounting for 52%, followed by the US with 31%, the UK with 7% and the rest of the world making up the balance of 10%.

Iberdrola said that over the reporting period it had seen ‘continuous government support in [its] main markets’. In the EU, 23 countries published their renewable energy action plans of which eight set targets above the initial requirements. In the UK, the setting of offshore wind targets had also been a boost. In the US, regulatory visibility in the form of grants through to 2012 had helped while Brazil had periodically held capacity auctions, said the company.

Iberdrola also has an eye on developing its business in Mexico, Germany, Poland and Romania, countries which it said had favourable renewable energy action plans.

It also noted that its average load factor had experienced a modest growth of 0.3% year-on-year in September to 25%.

By region, Iberdrola’s installed capacity grew most significantly in the US over the period, closing in September 2010 up almost 1.7 GW or 29.6% at 7.43 GW. In second place was Spain, which added 1.15 GW of capacity, an increase of 18.2% on year, closing out at 7.5 GW at the end of the third quarter. The only region in its portfolio to see a drop was in the UK, where it shed 288 MW of wind capacity to end the third quarter down 22.7% at 984 MW.

The headline numbers for the nine months to end September show the company’s revenues were up 17.7% on year at €1.597 billion, gross margin was up 16.8% at €1.411 billion, while net income gained 7.1% on year to close out at €179.4 billion.

In its outlook the company forecast ‘a sustainable double digit growth in capacity in results… maximising profitability and growth’. Expanding, it said it saw opportunities in cost reduction in production and capex; through national emission reduction targets, as well from national targets for the deployment of renewable energy.


German wind turbine manufacturer REpower in late-December reduced its outlook for the company’s financial year, saying it expected to close out the year with an earnings performance of between €1.25-1.35 billion, down from its original forecast of €1.5-1.6 billion. Its FY operating margin was expected to drop to between 5% and 7%, down from previous estimates of 7.5%-8.5%.

An increase in project postponements — largely the result of pending but not yet closed financing arrangements — was the main driver behind the revisions, said the company. ‘In light of the weak market development, it has only been possible to offset these postponed projects with adequate replacement orders to a limited extent in the current financial year,’ explained the company. ‘In response to the price and margin pressure, the executive board has already initiated extensive cost reduction measure in order to achieve a sustainable improvement in the competitiveness of REpower,’ it continued.

Elaborating, the company said it would seek to benefit from less expensive component parts from Asia, especially from China and India. ‘The first phase of this development will largely focus on established suppliers with corresponding local production sites.’

Starting this year, the company said it planned to manufacture wind turbines in Asia which would then be supplied to its markets in Australia, New Zealand and the US.


At Nordex the publication of its nine-month to end-September financial report saw CEO Thomas Richterich nod not only to the global financial crisis but also to increased competition in the sector as being behind the need to revise down its original sales target of €1.2 billion. Although he said the company was expecting a strong performance in Q4, for which it has yet to report, he conceded that even this would not push results any closer to the original target, and instead set a new expectation in the region of €1 billion.

‘Despite the lower capacity utilisation, however, we still expect to operate more profitably than in the previous year thanks to a number of different factors,’ said Richterich. ‘First of all, we were able to achieve a broader gross margin in the first half of the year thanks to favourable sourcing conditions. Moreover, in the current quarter [Q4] we expect to be able to harness the initial positive effects of out earnings-enhancement programme.’

Continuing, he said: ‘We are responding to what we assume will be the sustained pressure on prices in our industry by initiating a multi-year cost-cutting programme that also include product construction innovations. At the same time [we are] working on the technical optimisation of the wind power systems.’

‘These modifications are being incorporated in existing series as well as new products. We are systematically continuing on the course which we adopted a few years ago to install a new industrial production system allowing us to reinforce our position in the market. Beyond this, however, we also want to enter new markets, one example being the offshore market.’ Concluding, he said that the company had grown ‘very intensively’ over the previous five years but that the challenges of 2010 would leave the company unable to achieve its expected growth rates. But he added that he expected ‘renewed opportunities for expansion in 2011’.

First Solar

Nasdaq-listed and US-headquartered First Solar reported positive third quarter and nine months to end-September results with key indicators including sales, operating income and net profit all gaining year-on-year for both the three- and nine-month periods.

With net sales of $797.9 million in the third quarter, the company realised a $210 million increase on the previous quarter, which it said had been driven principally by the sale of its 60 MW Sarnia Phase 2 project in Canada. This, it added, had partially offset a decline in its module average selling price and lower blended euro exchange rates. Year-on-year its Q3 sales were up 66% to $797.9 million, which it said came off the back of increased systems revenue and module production volumes. 

Net income was $2.04/fully diluted share in the third quarter, up from $1.84 in the second quarter. Operating income came in at $211.6 million for Q3 and £853.3 million for the nine months to end-September, against $162.8 million and $534.9 million for the same periods of 2009 respectively. Net profit Q3 totalled $176.9 million, up year-on-year from $153.3 million. Nine-month to end-September net profit closed the period at $508.3 million, up from $536 million in the corresponding period of 2009.

Speaking as the results were released, CEO Rob Gillette said: ‘We continue to execute on our growth strategy and to develop sustainable market for solar electricity. Our investment in research and development combined with plans to nearly double our manufacturing capacity will help us meet robust customer demand while continuing to drive down the cost of solar power.’


Germany-based Q-Cells pulled out a healthy set of three- and nine-month numbers which saw Q3 revenues gain 20% on the preceding quarter to close at €401.6 million alongside an EBIT of €36.7 million, 35% up from Q2. Meanwhile, it says a comprehensive capital measures package helped it ensure medium-term financing. Success in expanding its business in North America as well as the completion of an expansion to its manufacturing facilities in Malaysia conspired to please the chief executive officer Nedim Cen.

Speaking at the publication of Q3 and 9M results, Cen said: ‘The third quarter was driven by high demand and an associated stable price development, which had a positive impact on the business development of Q-Cells. The restructuring programme has almost been completed and in addition to the ensuing cost cuts, also our rigid realignment efforts have had a positive impact on the key financial figures of the third quarter.’

Continuing, he said: ‘In the course of our realignment activities we have already achieved key milestones, some of them even earlier than anticipated.’ But he cautioned that the market remained in a challenging condition, saying: ‘We believe that the timely implementation of capital measures was a success as these measures give us sufficient planning security and financial scope to continue to push our target to position the company as leading provider of integrated PV solutions.’

In the report, the company said that at the start of 2010 the sales price for solar cell/Wp was lower than in the last months of 2009 but nevertheless that the extent of the price decline was smaller than the 9%-11% reduction of the feed-in tariff in Germany at the beginning of 2010. The price, said Q-Cells, stabilised in the first few months of 2010 due to strong demand and a declining pressure on prices from Asian competitors which was driven, among other things, by currency developments, with average sales prices rising slightly during the first half of the year. Furthermore, the company said the level was maintained in the third quarter of the year and also that throughout 2010 it had reduced processing costs for solar cells.

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