Siemens Gamesa doubles 2019 profits but cuts forecast and jobs

Source: Siemens Gamesa Renewable Energy SA (www.siemensgamesa.com)

November 5 (Renewables Now) - Siemens Gamesa Renewable Energy SA (BME:SGRE) said Tuesday it doubled its net profit to EUR 140 million (USD 155.7m) in the fiscal year through September 2019 but announced glum short-term prospects and layoffs across its global team.

The wind turbine manufacturer said it met its financial guidance for the 2018/2019 fiscal year despite facing pricing pressures that hit the sector’s margins, global trade tensions and volatility in emerging markets. It named the same external pressures and specific company developments as the reason for slashing the guidance for the next fiscal cycle, calling it a “transitional year”.

Earnings before interest and tax (EBIT) pre-PPA, integration and restructuring (I&R) costs rose 4.6% to EUR 725 million after its transformation programme brought significant savings. The EBIT margin was down by 0.5 percentage points to 7.1%, staying within the guided range of 7%-8.5%. Siemens Gamesa expects these percentages to be as low as 5.5%-7.0% in 2019/2020.

The long-term EBIT margin forecast is optimistic, with Siemens Gamesa targeting an 8%-10% range from 2022 onwards.

The company said it will secure long-term growth through a restructuring programme. Specifically, it will cut up to 600 white-collar jobs over the next two years. It has already initiated consultations with workers’ representatives this morning.

A summary of Siemens Gamesa’s financial results is available in the table below:

in EUR million (unless otherwise noted)	FY 2018/19	Y/Y change	Q4 2018/19	Y/Y change
Revenues	10,227	12.1%	2,944	12.4%
-- onshore	5,225	7%	1,650	22%
-- offshore	3,508	18%	877	2%
-- service	1,493	17%	417	1%
EBIT pre-PPA and integration and restructuring (I&R) costs	725	4.6%	250	16.2%
EBIT margin pre-PPA and I&R	7.1%	-0.5 p.p	8.5%	0.3 p.p
I&R costs	206	16.8%	116	52.9%
Reported EBIT	253	19.8%	67	-8.2%
Attributable net profit	140	100%	52	104.1%

This year’s revenues were up 12.1% to EUR 10.2 billion, as all three business units -- onshore, offshore and service -- registered growth. Despite noting “strong topline visibility” on the horizon, Siemens Gamesa lowered its 2019/20 revenues guidance to EUR 10.2 billion-EUR 10.6 billion.

New markets and 1.5 GW in firm orders from Taiwan drove the offshore orders up 10.9% to 2.6 GW. The order intake in the onshore division increased by 4.8% to 9.4 GW, driven by activity in the US, India, Chile and China.

The overall order intake increased by 7.4% to EUR 12.7 billion, while the backlog grew 12% to EUR 25.5 billion.

Service, Siemens Gamesa’s lucrative business unit representing 47% of the company’s order book, recorded a 13.4% increase in orders to EUR 2.7 billion.

(EUR 1.0 = USD 1.11)