Siemens Gamesa reduced its losses by 31.7% in the fiscal year since October 2020

Rising raw material and transportation prices and launch costs for its 5.X platform have impacted profitability.

Siemens Gamesa

Siemens Gamesa recorded losses of 627 million euros in its fiscal year 2021 (October 2020-September 2021), which means a decrease of 31.7% compared to the ‘red numbers’ of 918 million euros from the previous year, has informed the manufacturer of wind turbines.

Between October 2020 and September 2021, Siemens Gamesa recorded sales of 10,198 million euros, 7.5% more, driven by growth in the business units of Offshore (+ 16%) and Services (+ 9%).

Increased prices for raw materials and transportation, coupled with higher platform launch costs Siemens Games 5.X They have impacted on profitability and have led the company to make provisions for contracts with risk.

As a result, the operating result (Ebit) pre PPA and before integration and restructuring costs was negative by 96 million euros, equivalent to an Ebit margin of -0,9% (compared to -2.5% in the previous year).

The company closed its fiscal year with a financial performance in line with the lower limit of the guidelines reported in July 2021 (sales around 10.2 billion euros and EBIT margin between -1% and 0%).

The good time for renewable energies boosted the order book by 7.6% year-on-year, up to 32,542 million euros, which shows the good positioning of Siemens Gamesa to take advantage of the enormous potential of wind power.

The financial performance of the company in fiscal year 2021 reflects the market imbalances, caused by the difficult supply chain conditions, with strong increases in raw material prices, shortages of certain components, logistics bottlenecks and high transport costs.

The impact of these imbalances was especially intense during the second half of the year and is expected to continue to affect operations in 2022. The launch costs of the Siemens Gamesa 5.X platform, higher than expected, also had an impact on the financial year performance.

Siemens Gamesa signed orders for 12,185 million euros in 2021 and closed the year with an order book of 32,542 million euros, 2,294 million euros more than on September 30, 2020.

The order-book in September 2021 it covers 91% of the sales forecasts announced for the financial year 2022. The orders signed in the fourth quarter amounted to 2,884 million euros (+13%), driven by the good results of Services and Offshore.

Onshore signed orders amounting to 4,708 million euros (-15%), mainly due to the company’s commercial strategy aimed at controlling risk and prioritizing the profitability of the projects in the portfolio. Also due to the slowdown in sales of the Siemens Gamesa 5.X platform and the stoppage in the US and Spanish markets.

New platforms with a capacity equal to or greater than 4 MW represented 68% of the total orders received in the year, of which 30% corresponded to the Siemens Gamesa 5.X platform. “This reinforces the view that this is the right platform to strengthen Onshore operations,” the company notes.

In Offshore (marina wind), the traditional volatility of the order intake has translated into a volume of contracts of 888 million euros in the fourth quarter, after the signing of the first contracts in the United States. During the year, Offshore’s contracting volume reached 4,068 million euros.

Siemens Gamesa affirms that it continues to maintain a very close collaboration with its clients in preparation for the high volume of auctions expected in 2021 and 2022 (32 GW) and the following years (57 GW), given the role of offshore as main source of energy to achieve decarbonisation targets.

“With 14 GW in its portfolio and pipeline, Offshore is prepared to take advantage of the strong increase in demand that is expected from the year 2025”, he highlights.

The financial guidelines of Siemens Gamesa for the financial year 2022 reflect, in the opinion of the company, the current difficult environment in the industry, with a decrease in sales between 2% and 7%, and an EBIT margin before PPA and costs integration and restructuring between 1% and 4%.

Postpone goals

The long-term vision remains strong and unchanged for the company. Siemens Gamesa maintains its long-term goal of reaching an EBIT margin pre PPA and before integration and restructuring costs of between 8% and 10% for fiscal year 2024/2025, (previously set target for 2023), due to the temporary impact of current challenges.

In addition, given its strong position in Offshore, the company expects to achieve higher-than-market sales growth. This vision is supported by the recovery of profitability in Onshore and in the sustained and profitable growth of Offshore and Services, leveraged in the LEAP program and in the restructuring initiatives, including mechanisms to protect profitability against the volatility of the prices of raw materials and transportation costs; cost reduction programs and new technological developments.

“We operate in a difficult environment, with difficult short-term market dynamics and no visibility into when supply chain problems will normalize. In the meantime, we will continue to work to return to the path of sustainable profitability. However, these short-term difficulties should not overshadow the bright future of wind power, which plays an essential role in the decarbonization of our planet. As a society, we have a responsibility to stop the climate emergency now. We have to promote frameworks that allow the necessary acceleration of renewable energies. Wind power is an effective technological solution to achieve this, ”says Andreas Nauen, CEO of Siemens Gamesa.

During the year, as part of the LEAP program, Siemens Gamesa has implemented measures to protect performance in the face of the complexity of the current supply environment and to reinforce the competitive positioning of the Siemens Gamesa 5.X platform.

Between July and September, Siemens Gamesa reported sales of 2,863 million euros and EBIT pre PPA and before integration and restructuring costs of -177 million euros with a margin of -6.2%. The net profit attributable to Siemens Gamesa shareholders in the fourth quarter stood at a negative figure of 258 million euros.

Siemens Gamesa affirms that it ended the year with a “solid” balance sheet and ample access to financing lines. As of September 30, 2021, the net financial debt position was 207 million euros, with 4,443 million euros in authorized financing lines, of which 1,346 million euros have been drawn down.