Siemens Gamesa Renewable Energy SA (BME:SGRE) on Thursday reported a net loss of EUR 403 million in its first quarter through December 2021, compared to an EUR-11-million profit in the same period a year ago, and confirmed a grim outlook for the rest of the year.
As announced in the preliminary earnings report two weeks ago, EBIT pre-purchase price allocation (PPA) and integration and restructuring (I&R) costs came down to a negative EUR 309 million, while revenues for the October-December quarter fell by 20.3% year-on-year to EUR 1.83 billion.
The wind turbine maker attributed the results to continued supply chain disruptions, exacerbated by the Covid-19 pandemic, higher cost inflation and overall volatile market conditions, which prompted some of its customers to put off their investment decisions. Costs to launch the 5.X turbine platform, which needed some re-design, only added to the burden.
Siemens Gamesa said it is working on several measures to deal with supply chain and logistics costs and improve its profitability, including the potential sale of its wind projects pipeline in southern Europe.
Nevertheless, the unfavourable results cost CEO Andreas Nauen his job. Siemens Gamesa announced yesterday Nauen would officially step down on March 1 and be replaced with Jochen Eickholt, a member of the executive board of the company’s controlling shareholder Siemens Energy AG (ETR:ENR).
Selected figures from Siemens Gamesa’s Q1 2021/2022 earnings report are presented in the table:
| In EUR million (unless otherwise noted) |
Q1 2021/2022 |
Q1 2020/2021 |
y/y change |
| Revenues |
1,829 |
2,295 |
-20.3% |
| -- onshore |
941 |
1,061 |
-11.3% |
| -- offshore |
460 |
838 |
-45.2% |
| -- services |
429 |
396 |
8.4% |
| EBIT (loss) pre-PPA and before I&R costs |
(309) |
121 |
-- |
| EBIT margin pre-PPA and before I&R costs |
-16.9% |
5.3% |
-22.2 p.p. |
| Reported EBIT |
(377) |
14 |
-- |
| Attributable net income (loss) |
(403) |
11 |
-- |
Revenues and operating earnings of the wind turbine business were severely impacted by the supply chain challenges, namely shortages of materials, delays in component deliveries, inflation and transportation costs. These troubles then led to lower manufacturing volumes, late project execution and delivery, including related customer-imposed penalties, and overall higher costs.
Siemens Gamesa’s services business fared better during the quarter and managed to increase the fleet under maintenance by 9% year-on-year to 82 GW, the turbine company said.
The total order intake in the October-December period rose by 8% year-on-year to EUR 2.47 billion, underpinned by growth in orders picked up by the services and offshore divisions. Orders for onshore turbines dropped by 16% to EUR 1.36 billion. This was due to delays in Spain, protracted sales negotiations in the current inflationary environment and a hiatus in the US market as it awaits a potential extension of wind power production tax credits, Siemens Gamesa said.
Looking ahead, Siemens Gamesa does not expect supply chain challenges to improve by the end of the year. In this context, the company confirmed its outlook for the remainder of the fiscal year, expecting a revenue decline of between 9.0% and 2.0% year-on-year in 2021/2022. EBIT margin pre-PPA and I&R costs is seen to range between -4.0% and +1.0%.
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Siemens Gamesa's SG 8.0-167 DD offshore wind turbine. Image source: Ørsted
