Renovables, REC post firm H1 results, upbeat on 2010

MADRID/OSLO Tue Jul 20, 2010 3:11pm EDT

MADRID/OSLO (Reuters) - Iberdrola Renovables and Renewable Energy Corp kicked off Europe's green energy reporting season on Tuesday with sharp upticks in first-half earnings and upbeat 2010 forecasts, but neither gave a forecast for 2011.

Spain's Renovables, the world's largest generator of wind power, reiterated its forecast to grow its core earnings by 20 percent in 2010, while Norway's REC, which makes solar power equipment, forecast growth in the second half, thanks to higher demand.

"Demand is very strong in Germany, and we see growth in Italy and other markets. We anticipated prices to decline, but they have been more steady than anticipated," REC Chief Executive Ole Enger told a news conference.

After a tough 2009, clean energy firms are expected to post strong results -- with REC and Iberdrola the first big renewables companies to report for the half -- although valuations have dipped recently due to the fears about weak medium-term demand and subsidy cuts.

Both companies are facing visibility problems, as their core markets of Spain and Germany process subsidy cuts for wind and solar power, with REC saying it is "cautious," while Renovables banks on its rapid internationalization.

"In our (2010-2012) investment plan, the Spanish market is fourth in our priorities ... The regulatory outlook does not make it so attractive," Iberdrola chairman Ignacio Sanchez Galan said on a conference call following results.

However while Renovables is confident that growing demand for wind power in its other core markets of the United States and the United Kingdom will support its business plan to 2012, REC was more cautious on the global outlook for solar power.

"One has to be cautious about 2011, especially about the first half of 2011. We prepare for a more imbalanced market in 2011, with more supply than demand -- so we will get back to a situation where there will be pressure on prices," Enger said.

REC more than doubled its core earnings in the first half to NOK 455 million, while Renovables' core earnings just missed forecasts but still surged 21.5 percent to 706.7 million euros ($913.1 million).

($1=6.284 Norwegian Crown)

($1=.7739 Euro)

(With reporting by Wojciech Moskwa, Gwladys Fouche, Terje Solsvik and Jonathan Gleave, editing by Gerald E. McCormick)