Siemens Gamesa Withdraws Guidance Following Second Quarter of EUR 300+ Million Losses

Wind turbine manufacturer Siemens Gamesa Renewable Energy, S.A. has put the guidance for the financial year of 2022 under review after reporting a EUR 304 million loss in the second quarter of the fiscal year.

Siemens Gamesa recorded a EUR 613 million loss in the first half (October 2021 – March 2022) of FY 2022.

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The company identified product and execution-related issues, mostly related to the Siemens Gamesa 5.X platform ramp-up process, and increasingly difficult market conditions, as the main reasons behind the poor performance during the period.

”During the second quarter of the financial year 2022, the ramp-up process of our Siemens Gamesa 5.X platform, which is more complex than previously understood, has continued to impact our production and project execution schedule,” Siemens Gamesa said.

”Additionally, production and profitability have continued to be impacted by further pressure on energy, commodities and transportation costs, availability of key turbine components, harbor congestions, and delayed customers’ investment decisions that are also affecting temporarily our Onshore commercial activity as reflected in a very low order intake in the second quarter.”

New assumptions for market and production conditions and new higher costs, including the recent price increases in raw material, have resulted in continuous evaluation of the company’s backlog in the wind turbine segment, affecting the company’s performance in the second quarter, Siemens Gamesa said.

The preliminary unaudited results for the second quarter show that Siemens Gamesa recorded EUR 2.2 billion in revenue, with the company’s net debt standing at EUR 1.7 billion.

EUR 1.2 billion in new orders was signed during the period.

The company has also reached an agreement for the disposal of the development assets in Southern Europe with SSE.

”The financial closing of this operation is now expected to take place in the second half of the financial year 2022 and at closing will have a positive impact of c. €580 million on Group revenues and a slightly lower contribution on EBIT pre-PPA and I&R costs, given transactional costs, book value and other items of c. 5% of the purchase price,” Siemens Gamesa said.

The company’s management has decided to reassess its expectations for FY 2022 given that ”the effect of all the factors mentioned earlier cannot be assessed with the usual degree of detail and certainty, making the re-evaluation of the forecast for the financial year 2022 complex.”

The uncertainties which could cause the actual results to differ from the guidance include the challenges in the ramp-up of the Siemens Gamesa 5.X platform, and the potential impact of recent geopolitical tensions, global supply chain disruptions, cost inflation, and COVID-19 developments, Siemens Gamesa said.

The turbine maker said it will continue to work to achieve revenue within its year-on-year revenue growth range of -9 per cent and -2 per cent, and towards the low end of its previously communicated EBIT pre PPA and I&R costs margin guidance range of -4 per cent, including for both now the positive impact of the Southern Europe asset disposal.

”In the six weeks since taking over as CEO I have been asking questions and drilling down into every part of the business to get an understanding of the issues and coming to conclusions about how to address them,” Jochen Eickholt, CEO of Siemens Gamesa, said.

”As a management team, we are now turning these insights into a program that can quickly get us back on track towards profitability and industry leadership.”

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