GE Vernova Faces Profit Challenges in Renewable Business

By Editor


General Electric’s renewable energy arm, GE Vernova has revealed its financial outlook, projecting an expected revenue of $34 billion to $35 billion, with an adjusted EBITDA margin in the mid-single digits, towards the higher end of the range. The company also aims for free cash flow ranging from $0.7 billion to $1.1 billion.

In the latest quarter, Renewable Energy and Power were instrumental in driving double-digit revenue growth. The combined efforts of these sectors resulted in robust revenue growth for the year, along with an operating profit improvement exceeding $1 billion and positive free cash flow. Services accounted for approximately 65 percent of the backlog.

One of the significant highlights for GE Vernova was securing a 2.4 GW order to support Pattern Energy’s SunZia wind project in New Mexico. This project, expected to be the largest wind project in U.S. history, involves 674 onshore wind turbines and a long-term services award.

However, GE Vernova faced challenges in its renewable energy orders that reached $5.1 billion, reporting a 1 percent increase, which includes the cancellation of a large offshore wind order initially booked in Q2 2023. Excluding this cancellation, orders saw a growth of over 20 percent, led by stronger onshore wind equipment and repower, GE said in its earnings report.

For the year, renewable energy orders at GE Vernova witnessed a substantial increase of 54 percent to $22.6 billion. Revenues of $15 billion rose by 16 percent across offshore wind, grid, and onshore wind equipment. The segment margin improved by 780 basis points, with onshore and grid improvements offsetting the pressure on offshore wind.

GE Vernova acknowledged the challenges faced by its power business, citing a 5 percent rise in orders amounting to $5.7 billion. Despite double-digit service growth in gas power, equipment revenue fell due to the company’s exit from steam new builds.

For the full year, power business orders of $18.5 billion rose by 4 percent, with revenues of $17.7 billion, showing a 9 percent increase. The growth was attributed to the delivery of 58 heavy-duty gas turbines, including 14 HAs, and strength in services.

GE’s Chief Financial Officer, Rahul Ghai, addressed analysts, explaining that the renewable business’s progress is expected to be more back-end loaded, emphasizing an operational turnaround and accelerated improvement in 2024, driven by energy transition demand, price adjustments, and increased productivity.

Despite the challenges, GE Vernova remains optimistic about the trajectory of its renewable business and anticipates a stronger performance in the latter half of the year. The company is closely monitoring market dynamics and energy transition trends to capitalize on emerging opportunities.

Baburajan Kizhakedath

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