American Superconductor profits down; Sinovel blamed
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- Category: Business
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26 Sep 2011
- Published on Monday, 26 September 2011 04:15
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Photographer takes pictures of China’s wind farms in Inner Mongolia.
Electrical systems company American Superconductor Corporation announced that their revenues and profits for the first quarter of this year and the whole of fiscal year 2010 were hurt following cancelled supply deals with its largest customer.
The company's revenues for the first quarter ended June 30 fell to $9.1 million from $97.2 million a year earlier. Net loss was $37.7 million, or 74 cents a share, compared with $9.2 million, or 20 cents a share, year-on-year. As for fiscal 2010, revenues dived 10 percent from $316.0 million in 2009 to $286.6 million. AMSC reported a huge net loss of $186.3 million, or $3.95 per diluted share, for 2010 compared with net income of $16.2 million, or $0.36 per diluted share, in 2009. "The decline is due primarily to a lack of revenue from Sinovel," AMSC said in a statement blaming the slumping sales and losses to its largest customer. Beijing-based Sinovel Wind Group is also China's largest wind turbine manufacturer. Last month, Daniel McGahn, AMSC president, said they expected sales will be less than $10 million in the first quarter after Sinovel refused to accept shipments of electrical components and spare parts for wind turbines in March. The parts were supposed to be used for the 1.5-megawatt and 3-MW wind turbines Sinovel builds. AMSC said Sinovel planned to reduce its inventories first before accepting further shipments. Despite its optimism, the Massachusetts-based company eventually axed 150 jobs and saved $30 million from its 2011 expenses. The company's relationship with Sinovel seemed to have turned sour since then. Last September 15, AMSC filed criminal and civil charges in China against Sinovel, accusing the company of illegally using the American company's intellectual property. The complaint also included the AMSC supply contract with Sinovel. To date, Sinovel currently owes AMSC $250 million for past shipments and shipments that they're contractually bound to accept, according to Mr. McGahn. In a conference call, Mr. McGahn confirmed that a former AMSC employee pleaded guilty to charges including economic espionage and fraudulent misuse of data in an Austrian court. The employee said Sinovel paid him well over $1 million for the information. Mr. McGahn said AMSC's financial results for fiscal 2010 and the first quarter of fiscal 2011 are a "reflection of our past." "Our efforts to build a better AMSC are now well underway. We have reduced our cost structure by more than $30 million annually and realigned our business into market-facing wind and grid segments." New contracts AMSC on Friday reported bagging $100 million in wind energy and smart grid contracts in the emerging markets of China, India and Korea. In China, AMSC signed a new multi-year contract to deliver wind turbine electrical control systems to Beijing's Jingcheng New Energy Company, a subsidiary of state-owned Jingcheng Machinery Electric Holding Co., Ltd. Shipments are expected to begin in late 2011 and conclude in early 2014. In India, AMSC signed a contract to deliver wind turbine electrical control systems to Inox Wind Limited. Inox manufactures 2-MW turbines under an AMSC license. The new electrical control systems are expected to be shipped late 2011, concluding in 2012. In South Korea, AMSC signed new contracts with Hyundai Heavy Industries to provide wind turbine core electric components also this year. AMSC also announced the first superconductor wire shipment to LS Cable & System under a multi-year supply agreement in October 2010. The company also increased its business in Europe and the United States with several new grid integration solution contracts related to wind and solar power plants. In total, AMSC's solutions will allow these plants to integrate over 150 MW of renewable energy into the grid. AMCS also signed a multimillion dollar contract to provide their D-VAR system for Keys Energy Services, a public power utility in Florida. The system will be used to improve voltage stability as Keys Energy Services, along with the Florida Municipal Power Agency and the Florida Keys Electric Co-Operative, work on a project that seeks to increase the import capacity of a 120-mile-long transmission line to the Florida Keys from the Florida mainland. (Oliver M. Bayani and Katrice R. Jalbuena)
