Ormat revenue falls with less plant, equipment sales

Geothermal energy company Ormat Industries Ltd. (TASE: ORMT) reported higher net profits on lower revenue for the first quarter, due to a sharp drop in product sales.

Ormat's revenue fell 16.7% to $85.2 million for the first quarter from $102.3 million for the corresponding quarter of 2009.

Net profit rose 38% to $6 million for the first quarter from $4.3 million for the corresponding quarter. Net profit attributable to majority shareholders was $4.8 million for the first quarter, compared with a net loss attributable to majority shareholders of $1.8 million for the corresponding quarter.

Sales from the generation of electricity from geothermal projects rose 5.5% to $68.6 million for the first quarter from $65.1 million for the corresponding quarter. However, product sales for geothermal power plant equipment fell 55.6% to $16.5 million from $37.2 million.

Ormat increased its electricity production to 953,000 megawatts in the first quarter from 924,000 megawatts in the corresponding quarter. Most of the increase was due to the partial coming on line of the North Brawley project in California in January 2010. It currently generates 20 megawatts. This was partly offset by reduced production at the company's Puna plant in Hawaii to only 17 megawatts, due to breakdowns in the plant's pipes.

Another contributing factor to the growth in electricity sales was an increase in the average price per megawatt/hour to $72 in the first quarter from $70 per megawatts in the corresponding quarter.

Ormat took into account the drop in product sales in its guidance. The company attributed the fall to a drop in its orders backlog.

Ormat CEO Yehudit Bronicki said, "The first quarter results reflect the company guidance. We believe that the North Brawley plant will reach full capacity of 50 megawatts by early next year, and that Puna plant will begin generating more revenue in the second quarter of this year, as the repairs progress."

Bronicki added, "The company is currently building power stations with a capacity of 284 megawatts, of which 170-200 megawatts will come on line by 2013. We are also considering acquiring a small geothermal plant as part of our growth strategy that is based on organic growth and acquisitions of existing power plants."

Ormat's US subsidiary Ormat Technologies Inc. (NYSE: ORA) published its first quarter financial report last week. Earlier this week, Ormat Industries authorized a buyback of up to $50 million shares in Ormat Technologies.

Ormat's share price was unchanged in early trading today at NIS 28.18, giving a market cap of NIS 3.35 billion, after falling 4.2% yesterday.

Published by Globes [online], Israel business news - www.globes-online.com - on May 12, 2010