Siemens Gamesa’s EBIT down 63% in fiscal Q4

Gamesa wind park in India. Source: Gamesa. License: All Rights Reserved.

November 7 (Renewables Now) - Siemens Gamesa Renewable Energy SA (BME:SGRE) saw its underlying earnings before interest and tax (EBIT) drop by 63.4% on the year to EUR 192 million (USD 222.7m) in its fiscal quarter ended September, hit by certain unfavourable market conditions.

The lower result led to a decline in fourth-quarter EBIT margin to 3.8% from 9.2% a year back and a 12.3%-drop in revenues, Siemens Gamesa said in a press release on Monday. The wind turbine manufacturer attributed the decline to a temporary suspension in India and inventory impairments related to accounting adjustments. Excluding these effects, revenues slipped by 2%, while EBIT margin stood at 7.3%.

The following table shows more details about the company’s performance in Q4:

Results in EUR million Q4 2016/17 Q4 2015/16
Underlying EBIT 192 525
Underlying EBIT margin 3.8% 9.2% 
Profit 118 N/A
Revenue 5,022 5,726 
Free cash flow 377 N/A

"Our financial performance is still not at the level we're all aiming for. But it's clear that we are making positive progress as we carry out our plan to make this company an industry leader,”said CEO Markus Tacke.

Fourth-quarter revenues from wind turbine sales declined by 15% to EUR 4.4 billion due to problems in the onshore markets, especially in India and the UK. Meanwhile, sales in the services division went up by 9% to EUR 621 million.

The quarter was a strong one for the company in terms of new orders as its order intake in the three months jumped by 40% to 3 GW at the end of September.

Siemens Gamesa closed 2016/17 fiscal year with an underlying EBIT of EUR 774 million, down 18% on a yearly basis. Revenues were 5% higher at EUR 10.96 billion. Gamesa of Spain and Siemens Wind Power officially merged in early April, with the merged entity being on track to achieve more than 90% of its integration goals. It finished 2016/17 with an installed turbine capacity of 83 GW and an order book worth EUR 21 billion.

For the next fiscal year, the company projects revenues of between EUR 9 billion and EUR 9.6 billion and and an underlying EBIT margin of 7%-8%. In the long-term, it said the wind energy share of the global energy generation mix is seen to more than quadruple to 17% by 2040 from 4% currently.

(EUR 1.0 = USD 1.160)

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