GE Vernova (GEV, Financial) reported a strong performance in Q2 2025, driven by high demand for power and grid infrastructure systems. CEO Scott Strazik described the current scenario as an "investment supercycle" focused on reliable baseload power, grid infrastructure, and decarbonization solutions. This positive outlook has boosted GEV's share prices.
GEV's backlog increased by $5.2 billion sequentially, reaching $128.7 billion. This growth was mainly due to a rise in orders for gas power equipment, showing strong market demand. The backlog and slot reservation agreements for gas power equipment grew from 50 to 55 gigawatts, with 9 gigawatts of new contracts signed. This positions GEV well to meet global power needs, especially in the U.S., Japan, and Romania.
- Power Segment: Orders increased by 44% organically to $7.1 billion, driven by demand for gas power equipment and services. Notably, there was a contract for three H-class gas turbines for Japan’s Nanko power station. Segment revenue rose 6.8% to $4.76 billion, with EBITDA margin expanding by 260 basis points to 16.2%, despite tariff-related costs.
- GEV raised its FY25 Power segment guidance to 6-7% organic revenue growth and 14-15% EBITDA margin, reflecting confidence in demand and operational efficiency as gas turbine utilization increases.
- Electrification Segment: Revenue jumped 23% (20% organically) to $2.2 billion, driven by Grid Solutions’ growth in HVDC, switchgear, and transformer volumes. The segment's EBITDA margin almost doubled to 14.6%, supported by higher volume and favorable pricing. The equipment backlog grew by $2 billion, with strong demand in North America, Europe, and Asia. The outlook was upgraded to ~20% organic revenue growth and 13-15% EBITDA margin for FY25.
- Wind Segment: Revenue increased 9% to $2.2 billion, with higher onshore wind deliveries. However, segment EBITDA losses widened to $(165) million due to high onshore wind service costs and tariffs affecting offshore wind. The company invested over $100 million to improve its wind turbine base, but offshore wind challenges remain.
- Management expects FY25 EBITDA losses to trend toward the lower end of the $200-$400 million range, with onshore wind margins anticipated to improve to high single digits.
GEV’s Q2 results underscore strong demand in its Power and Electrification segments, fueled by global electrification and decarbonization trends. The company's ability to grow its backlog and expand margins despite tariff pressures highlights its leadership in energy transition, with promising growth in gas power and grid infrastructure.
