Zacks_Analysts' Blog : General Cable Wins Contract - Analyst Blog

Norddeutsche Seekabelwerke GmbH, a subsidiary of General Cable Corporation (BGC), has won a Euro 195 million, or $270 million contract from 50Hertz Offshore GmbH, a subsidiary of the German-based transmission network operator 50Hertz Transmission GmbH.

As per the contract, General Cable will provide its comprehensive turnkey solution for Baltic 2, which is an offshore wind farm of Rostock in Germany, located in the Baltic Sea near Rugen island. The installation work at the wind farm is expected to start in 2012.

The company will be responsible for supply and installation of submarine transmission cables of 120 kilometers and 3 single cores underground terrestrial transmission cables of 12 kilometers each. General Cable will also provide related accessories for the Baltic 2 wind farm, which will have 80 wind turbines, with individual capacity of 3.6 megawatts and total output of 288 megawatts. The plant is designed to produce 1,200 gigawatt hours of electricity annually for about 340,000 families. The wind farm is expected to reduce CO2 production by about 900,000 tons annually.

General Cable’s Nordenham, Germany based submarine power cable business, part of its wholly owned subsidiary Norddeutsche Seekabelwerke, will be handling the project. Norddeutsche Seekabelwerke was acquired by General Cable in 2007, thus expanding its submarine business widely. The company’s submarine offerings at present include telecommunication cables, oil and gas cables, medium-voltage and high-voltage power cables, related accessories, project engineering, project management and installation.

Over the long term, the company is expected to benefit from its position as one of the world's leading providers of wire and cable for electrical utilities, industrial electric infrastructure, construction, and telecommunications end markets.  Over the last decade, the company has completed a number of acquisitions that have broadened its geographic reach and depth of product offerings, which will help it to limit its earnings volatility.

In addition, General Cable's strong management team, focus on continuous cost reductions, and scale advantages will likely provide a solid foundation for its long-term earnings growth.

However, the markets for all General Cable’s products are highly competitive.  Though competitive factors for the company’s products vary across the different product categories, the principal factors influencing competition are generally price, quality, breadth of product line, inventory availability, and delivery time and customer service. A major competitor of General Cable is Sumitomo Electric Industries Ltd.

Based in Highland Heights, Kentucky, General Cable Corporation is a global leader in developing, designing, manufacturing, marketing, distributing and installing copper, aluminum, and fiber optic wire and cable products. The company’s products are designed for the energy, industrial, specialty, and communications markets.

We have a Zacks Rank of #3 (short-term Hold recommendation) on General Cable.