After a record year for revenue and activity, Ormat Technologies ((NYSE:ORA) reported lukewarm results for the first quarter today. The decline mainly stemmed from a fall in equipment sales to geothermic power plants.
Ormat Technologies is active in geothermic energy in two forms: products, in which it constructs power plants fro customers, receives payment, and exits the deal; and electricity, in which it also owns the power plant, and benefits from the cash flow that the plant generates.
In the first quarter of 2010, total revenue was $82.7 million, compared with $99.3 million in the first quarter of 2009, a fall of 16.8%. Revenue from the Electricity Segment rose 6.5% from the first quarter of last year to $66.1 million, thanks to high utilization of the company's plants, other than the Puna and North Brawley plants, which are working at partial capacity due to technical breakdowns. Revenue from the Product Segment was $16.5 million, compared with $37.3 million in 2009. The company said that, as per its 2010 guidance, it expected this reduction to affect revenue from the Product Segment throughout this year.
For the quarter, the company reported a net profit of $1.8 million, or $0.04 per share, compared with a net profit of $14.5 million, or $0.32 per share, for the same period of 2009. That the company made a net profit in the first quarter of this year is attributable to tax rebates and receipts the sale of a New Zealand subsidiary amounting to $6.3 million.
Ormat Technologies declared a dividend of $0.05 per share, or $2.2 million in total, and said it expected to pay similar dividends in the next two quarters.
Ormat Technologies CEO Dita Bronicki said, "From an earnings perspective, we expected the first half of the year to be challenging due to a decrease from very high revenues and gross margins in our Product Segment in 2009, lower revenues from Puna and lower revenues and high operating costs from North Brawley. Based on the progress that was made in repair work in Puna, we expect revenues to improve in the second quarter. In North Brawley, we expect generation to ramp up towards the end of the year.
“While these known challenges impacted our financials, our growth strategy remains the same. Last week we announced that we made significant progress in our negotiations to revise the Energy Sales Contract (ESC) at the Sarulla project in Indonesia. We have agreed on a levelized power price of $68 per MWh, and we expect to sign an amended ESC within the next three months. Additionally, we acquired several properties that we believe present strong prospects for growth."
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2010
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