Theolia SA, the French wind-power company part-owned by General Electric Co., fell after reporting a first-half loss on higher costs and cutting a target for full- year operating profit.
Theolia, based in Aix-en-Provence, fell 25 cents, or 1.8 percent, to 13.80 euros in Paris trading, its lowest close since January. The net loss was 25.3 million euros ($36.6 million), compared with a profit of 6.2 million euros a year earlier.
The company, which had planned to sell about half its wind- energy capacity, now intends to retain installations to take advantage of higher demand for power from renewable-energy sources. Debt-financing costs increased, and Theolia may have to raise cash in the market or develop partnerships with utilities to pay for wind-farm development.
“Sell the stock on the back of a poor pipeline and strong cost inflation,'' Exane BNP Paribas analyst Yohann Terry wrote in a report today. “Small wind-park developers are squeezed because of skyrocketing wind-turbine prices.''
Theolia's debt rose to 398 million euros from 216 million euros at the end of 2007. Earnings before interest, tax, depreciation and amortization rose to 8.6 million euros, compared with a 3.3 million euros loss a year earlier.
“As long as we have enough money we will continue as we are, otherwise we will go to the market or seek a partnership,'' Chief Executive Officer Jean-Marie Santander, 57, told reporters. “We would lean toward going to the market.''
Higher Debt
Theolia cut its 2008 Ebitda outlook to “a minimum'' of 20 million euros from a forecast of 55 million euros to 65 million euros, saying it would sell less wind capacity.
Theolia co-founder Santander will relinquish his CEO role, which he has held since 2004, and remain as chairman, the company also said. It is seeking a new chief executive.
“We will gain long-term visibility by keeping our megawatts,'' Santander said in an interview today, adding that the change was promoted by a rise in wind-power rates in many countries, including Germany. Theolia “is interested and continues to hold talks'' on acquisitions, he added.
Interest in electricity production from renewable-energy sources has gained as power companies seek to burn fewer fossil fuels such as coal and natural gas, blamed for global warming.
Greenhouse Gas
Alternative-energy generation has also been boosted by a European Union target to cut greenhouse-gas emissions 20 percent by 2020 from 1990 levels. Theolia has long been the subject of speculation that it's a takeover target by utilities seeking to increase their renewable-power capacity.
General Electric, which has a 17 percent stake in the company, “voted in favour of the change in our strategy,'' he said.
Theolia is also planning asset sales such as a waste management unit at Beaucaire in southern France and maybe its 27 percent stake in waste-to-energy company Thenergo NV, Santander said.
“The markets are difficult so this is on hold,'' he said of the Thenergo sale.
Theolia's wind-power capacity in operation totaled 661 megawatts at the end of June, with 474 megawatts of projects to be commissioned by the end of 2009, the company said.
New Capacity
Last year, Theolia acquired 165 megawatts at seven wind farms in Germany from GE Energy Financial Services and 50 megawatts in Morocco from Cie. Eolienne du Detroit. It bought the GE Energy assets with cash and shares.
Theolia had 2,796 megawatts in development at the end of June, including 199 megawatts under construction. The company maintained plans to boost the capacity it operates to 2,000 megawatts by 2011 and said it has secured the supply of 1,000 megawatts of turbines.
“We will try to keep a maximum of wind capacity for our own operations depending on our ability to do this and regulations,'' Santander said. The company will be obliged to sell some capacity in certain cases, he said.
Of the 11 analysts tracked by Bloomberg who follow Theolia, five recommend selling the stock, five suggest holding it and one says to buy the shares.
