GE's energy spin-off eyes better days for offshore wind
By Nicole Jao
NEW YORK, March 6 (Reuters) - General Electric's energy spin-off, GE Vernova, on Wednesday said it expects to clear a massive backlog in offshore wind equipment over the next two years, signaling improved market conditions for the beleaguered sector.
The company has faced an offshore wind equipment backlog totaling some $4 billion over the past two years, executives said during an investor day in New York.
"[The equipment backlog] will meaningfully convert to revenue over the next two years," said GE Vernova CEO Scott Strazik. "We will only add to that backlog with meaningfully better economics and terms than what is in our backlog today."
The U.S. offshore wind industry has been hit with cancellations and delays, and companies have faced hefty writedowns as soaring inflation, interest rate hikes and supply chain issues increased project costs.
"We're encouraged by the market," said GE Vernova Wind CEO Vic Abate. "When you look at the tailwinds and offshore, I would say there's a reset underway," he said.
GE's offshore wind business posted $1.1 billion in losses in 2023.
GE announced in November 2021 it would break up into three companies focused on energy, aviation and healthcare. GE Vernova, its energy business, is expected to be fully separated from General Electric and begin trading on the New York Stock Exchange on April 2.
On Wednesday, the company reaffirmed its expectation for GE Vernova to generate revenue of $34 billion to $35 billion and free cash flow of $700 million to $1.1 billion in 2024.
GE Vernova plans to tap into the $265 billion energy transition market to improve margins in the troubled onshore wind sector and also bolster profits in its gas power business, Strazik said.
The energy transition market is expected to grow from $265 billion today growing to at least $435 billion by 2030, Strazik told investors.
"The energy transition is the next investment supercycle," he said.
(Reporting by Nicole Jao; Editing by Liz Hampton and Marguerita Choy)
