COVID-19 has impact on Siemens Gamesa Q2 2020 results

In: TurbinesWindfarms
Siemens Gamesa has posted its Q2 2020 (January-March) results, citing the effect of the COVID-19 pandemic on its operations and commercial activity, with a direct impact of €56m on the company's profitability.

Order intake between January and March amounted to €2,203m (-11% YoY). Siemens Gamesa stated that this reflects the normal volatility of the offshore market and the impact of COVID-19 on the signing of onshore contracts, some of which were deferred to subsequent quarters.

Onshore order intake in the last twelve months increased to 9,485 MW (13% YoY) despite the 6% YoY reduction in the second quarter to 1,645 MW. Offshore order intake in the last twelve months increased by 56% YoY to 2,879 MW. In the second quarter, the company signed a preferred supplier agreement with Ørsted for the
Borkum Riffgrund 3 (900 MW) and Gode Wind 3 (242 MW) wind farms, raising the conditional pipeline to 10.7 GW.

Service performed extraordinarily well, boosted by a Senvion deal, having logged €3,870m in orders in the last twelve months (+75% YoY), and €779m in orders in the second quarter (+4% YoY).

EBIT pre PPA and before integration and restructuring costs amounted to -€103m in the first half, equivalent to a margin of -2.5% of revenues. In this context, the company booked losses of €165m in the second quarter, and €339m in the first half.

Despite strong commercial activity in the quarter, the expansion of the coronavirus was reflected in the company's revenues and returns. Revenues fell by 8% between January and March, to €2,204m, affected by lower sales of wind turbine generators. Revenues in the first half amounted to €4,204m (-9.6% YoY). EBIT pre PPA and before integration and restructuring costs amounted to €33m in the quarter, with an EBIT margin pre PPA and before integration and restructuring costs of 1.5%.

The decline in profitability includes the €56m direct impact of the coronavirus (equivalent to 2.5% of revenues in the quarter) as well as additional costs derived from the slowdown in the Indian market and in the execution of projects in Northern Europe, partially offset by the agreement between Areva and Adwen to resolve all disputes, obligations and liabilities and any past, present and future claims between them.

Markus Tacke, CEO of Siemens Gamesa, called for a green recovery: “We are experiencing a situation without precedent that has changed our lives in just weeks. Siemens Gamesa considers that the renewables industry must play a key role in the economic recovery to move towards a sustainable energy model that generates quality jobs. It is in our hands to avoid another crisis: the climate crisis.

“I would like to thank all our employees for keeping our business running and enabling us to continue serving our customers despite the difficulties. My most sincere gratitude for the responsibility and courage they demonstrate on a daily basis

Siemens Gamesa stated that it had reacted rapidly to address this unprecedented crisis and to safeguard the health and safety of its employees and the communities where it operates. The company enacted strict health and safety protocols ahead of official guidelines, both at plants and offices, and applied new solutions to assure operations continue – including re-routing certain supply chains, optimising remote monitoring to guarantee service operations and, in offshore, extending periods for maintenance teams working at sea. The company has also maintained a sound liquidity position, with credit lines amounting to €4.0b, against which it has drawn just €1.1b.

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