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Renewable power has been a tough business for GE for years.
Sebastien Salom-Gomis/AFP via Getty Images
General Electric
is scrapping plans for a wind turbine blade plant in the U.K.
Shares of General Electric (ticker:
GE
) were up 2.6% in late trading Tuesday. The
S&P 500
was down 0.6%. The
Dow Jones Industrial
Average is off 0.4%. GE is down about 33% for the year.
Tuesday’s gain comes after Morgan Stanley analyst Joshua Pokrzywinski cut his price target to $95 from $100 a share—the fourth price-target cut in the past few days. Analysts across the board are worried about demand in the next six months.
Weakening demand might be why GE is acting now, to cut costs and protect overall profit margins.
The factory, slated for the Teesside area in northeast Britain, would have produced wind turbine blades. A GE offshore wind turbine blade can be 107 meters, or 351 feet, long.
“While we are not moving forward with plans for a Teesside facility due to lack of volume, we remain committed to supporting the growth of U.K. offshore wind, including powering what will be the world’s largest offshore wind farm at Dogger Bank,” a GE Offshore Wind spokesman told Barron’s in a statement.
GE is providing the wind turbines for the Dogger project in the U.K. which is billed as the largest offshore wind farm in the world. When all phases are completed, the project is expected to generate enough electricity to power 6 million homes.
Wind power generation capacity grew about 14% a year on average from 2015 to 2020, according to the International Energy Agency. Offshore capacity has grown at about 24% a year on average over the same period. The IEA expects wind power generation capacity to grow about 18% a year on average from 2020 to 2030.
Still, the renewable power business has been tough for GE. The company has reported an operating loss in its renewable power division for 14 consecutive quarters. Losses grew in this year’s first quarter year compared with last year’s fourth quarter as inflation started to raise costs and hurt profit margins on older contracts, according to Bank of America analyst Andrew Obin.
GE will have to keep pushing to restructure its renewable power business to position it for profits in the future. Halting capacity expansion is one step down that path.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/ge-wind-turbine-blade-plant-renewable-energy-51657643329?siteid=yhoof2&yptr=yahoo