October 7, 2010 / 5:29 PM / in 7 years

Gamesa warns on 2011 sales, shares slump

MADRID/LONDON (Reuters) - Spain’s Gamesa cut its sales forecast for next year, the latest setback for the wind power firm and one which sent its share price tumbling.

Its shares ended 5.4 percent lower at 5.11 euros, the worst performer on the Madrid stock exchange. The stock hit a seven-year low last week.

The company narrowed its 2011 forecast sales range to 2,800-3,100 megawatts (MW) from 2,700-3,300 MW as part of a new business plan presented in London with an eye to boosting international investor confidence.

Gamesa has already cut its turbine sales forecasts this year after failing to seal a deal with German wind turbine maker Bard, and last month one of its major shareholders sold its stake at a loss.

SHIFT IN FOCUS

Gamesa says margins at its wind turbine arm will fall this year and next as the sector struggles across Europe. Margins will recover in 2013 when improved efficiency, more competitive energy costs and a heavy investment drive pay off.

The company forecast its margin on earnings before interest and taxes will improve to beiween 6 percent and 7 percent in 2013, from an estimated 4 percent to 5 percent in 2011.

“The message is of strong growth. But to achieve that growth, they will require strong investments at least until 2013,” an analyst for a leading European bank said.

Gamesa is now focusing on regions with higher growth potential such as India and China, and will gradually reduce its exposure to its home market. Domestic capacity will fall to 1,000 MW in 2013 from 2,200 MW now.

The company will also beef up investments in offshore wind turbines, and Chief Executive Jorge Calvet told Reuters it was committed to building an offshore factory in Britain, with concrete plans before year-end.

As of September the company’s 2011 orders were 719 MW, Gamesa said. It expects sales from its wind turbines to be around 4,000 MW in 2013.

Additional reporting by Andres Gonzalez and Tracy Rucinski; Writing by Tracy Rucinski; Editing by David Cowell and David Hulmes

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