Siemens Gamesa targets EUR 2bn of savings by 2020

Siemens Gamesa wind turbine. Photo taken from Siemens' website (www.siemens.com).

February 15 (Renewables Now) - Siemens Gamesa Renewable Energy SA (BME:SGRE) aims to cut costs and outgrow the market amid intensifying competition, according to a three-year strategic plan, L3AD2020, unveiled today.

The wind turbine manufacturer targets faster-than-market growth and EUR 2 billion (USD 2.5bn) in savings under the 2018-2020 plan.

The cost reduction target includes an accelerated and almost doubled target for merger synergies of over EUR 400 million by 2020. Initially, the merger between Gamesa and Siemens Wind Power was expected to create annual EBIT synergies of EUR 230 million in the fourth year following completion.

Other actions that will deliver savings include streamlining the product portfolio, procurement and industrial footprint, and the restructuring effort already underway, the Spanish-based manufacturer said. The measures will involve reducing third-party spending by means of scale and optimised product specifications, and increased production in lower-cost countries. With respect to the product portfolio, the company's strategy is to have one technology per segment, which means consolidating geared technology in the onshore segment and direct-drive technology in the offshore one. Over the three-year period it plans to launch turbines under the 4.2-MW platform with rotors of 132, 145 and 155 meters, as well as custom-configured turbines for strategic markets such as the US and India. In the offshore business, Siemens Gamesa aims to maintain its leadership in Europe, where it has a market share of 70%, and become "benchmark player" in new markets like Taiwan and the US.

In operations and maintenance (O&M) services, the firm plans to make use of digitalisation and grow its portfolio in the area by 40% to 80 GW by 2020.

Digitalisation is one of the three stated pillars of the three-year programme along with best-in class levelised cost of energy (LCoE) driven by cost optimisation and technology, and business model agility to provide customers with more flexibility in terms of products and services, financial solutions and response times.

Siemens Gamesa's 2020 targets include growing faster than the market in megawatt and monetary terms. According to the company, the onshore market will expand at an average annual rate of 5% by 2020, and the offshore market at 13% by 2025.

The company confirmed its guidance for fiscal 2017/18, through September, for revenues of EUR 9 billion-9.6 billion and an EBIT margin (pre-PPA, restructuring and integration) of 7%-8%.

Siemens Gamesa's objectives for 2020 include achieving an EBIT margin (excluding PPA, and integration and restructuring costs) of 8%-10%.

In addition, Siemens Gamesa said it continues to explore complementary businesses such as solar, hybrid technology and energy storage.

(EUR 1 = USD 1.248)

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Plamena has been a UK-focused reporter for many years. As part of the Renewables Now team she is taking a keen interest in policy moves.

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