SGRE plans for profit over volume

In: Corporate
27/08/2020
At its virtual Capital Markets Day, Siemens Gamesa Renewable Energy (SGRE) has outlined its path to long-term profitable growth. The company unveiled a strategy that “prioritizes profitability over volume, cash generation, as well as efficiency and productivity in all operations.”

Describing the long-term outlook for wind energy as highly favourable, the company acknowledged that the COVID-19 pandemic had caused some disruptions, also citing global trade tensions and the introduction of auctions.  SGRE intends to make the most of its strong competitive position in the offshore and service markets, while implementing a “turnaround process” for its onshore business.

“Public and government demand for clean energy solutions to climate crisis will drive continued investment in renewable electricity generation and we are well positioned to deliver value to shareholders and society by playing a full role in that process,” said Andreas Nauen, CEO of Siemens Gamesa. “It has been a tough period for the industry and the company, but I am confident we have all the right components in place. Our people, technology, scale and global footprint are strong foundations on which to build a long-term industry leader.”

The company’s new “LEAP programme” is based on three pillars – innovation, productivity, and operational excellence – with digitalization and sustainability as enabling factors.

“Our commitment to sustainability in everything we do enables us to proudly be an enabler of decarbonization trends contributing to combating the effects of climate change," Nauen added.


Financial objectives to be achieved by 2023 include:
·        EBIT margin pre-PPA and I&R costs in the range of 8%-10%
·        Grow faster than the market
·        Cash conversion rate1 greater than 1 minus growth
·        Net financial debt/EBITDA <1.0x and maintain investment grade rating
·        Distribute at least 25% of net profit in dividends
SGRE expects to achieve these objectives as financial framework by 2023. For fiscal year 2021, a transition year, SGRE expects revenues of €10.2-11.2bn and EBIT margin pre-ppa and I&R costs in the range of 3-5%.

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