Wind turbine manufacturer Siemens Gamesa Renewable Energy has reported a EUR 309 million loss in the preliminary results for the first quarter of the Fiscal Year 2022 (October 2021 – December 2021).
According to Siemens Gamesa, the company’s performance in Q1 FY 2022 was negatively impacted by supply chain-related disruptions, which are now expected to last longer than previously anticipated, further affected by the continued impact of the COVID-19 pandemic.
These supply chain tensions have resulted in higher than expected cost inflation, mainly affecting Siemens Gamesa’s wind turbine segment. Also, volatile market conditions are said to have impacted some of the company’s customers’ investment decisions and, as a consequence, resulted in delays to some of the projects.
Additionally, the ramp-up challenges of the Siemens Gamesa 5.X platform, including some necessary design changes, have affected the company’s production and project execution schedule.
The negative impact of these delays and changes in production plans has been exacerbated by the existing bottlenecks in the supply chain, Siemens Gamesa said.
The consideration of these higher costs and the update of the assumptions for market and production conditions in the evaluation of the total Onshore wind turbine order backlog, has led to a negative EBIT impact in the amount of EUR 289 million in Q1 FY 2022, mainly due to cost estimate deviations in onerous contracts.
The company’s Offshore contribution remained positive , and Service delivered more than 20 per cent profitability (EBIT pre Purchase Price Allocation (PPA) and before Integration & Restructuring (I&R)) in the quarter, despite supply chain disruptions.
The company’s revenue in the quarter was EUR 1.8 billion. The order intake for the quarter, including the offshore contract for the Gode Wind farm in Germany, was EUR 2.5 billion.
Full-Year Guidance
Siemens Gamesa expects the performance in the remainder of the year to benefit from stronger activity levels and the positive performance of the Offshore and Service businesses, while the company continues its turnaround efforts in the Onshore segment.
The company said it will continue working on cost optimization initiatives and implementing measures across the value chain to mitigate increases in logistic and supply chain costs. Additionally, Siemens Gamesa is also working on other initiatives such as the potential sale of its wind farm development pipeline in Southern Europe that could have a positive impact on our results.
Based on the first-quarter performance and the outlook for the remainder of the year, the company is adjusting its guidance for FY 2022.
Group comparable revenue growth in FY 2022 versus FY 2021 is expected to range between -9 per cent and -2 per cent (previously revenue decline between -7 per cent and – 2 per cent).
Group EBIT margin pre Purchase Price Allocation (PPA) and before Integration & Restructuring (I&R) costs is expected to range between -4.0 per cent and +1.0 per cent (previously between +1 per cent and +4 per cent).
Despite the complex near-term environment, Siemens Gamesa said it maintains its long-term vision for the business aiming for an EBIT margin pre PPA and I&R costs of +8 per cent to +10 per cent.