Siemens Gamesa completes a challenging fiscal year

In: Windfarms
Siemens Gamesa has issued its results for FY20 (Oct. 2019 - Sept. 2020) and Q4 2020. The manufacturer of onshore and offshore turbines logged an order intake of €14,736m (+15.6 y/y) during fiscal year 2020, which it noted was a 'challenging year due to Covid-19 and tough market conditions'. The company ended with a backlog of €30.2bn.

In the three months to 30th September, Siemens Gamesa reported an EBIT pre-PPA and before Integration and Restructuring costs of €31m, a margin of 1.1% on €2,868m in revenues. The company reported a decline in revenues for FY20 of 7% year-on-year to €9,483m, with EBIT pre PPA and before Integration and Restructuring costs of -€233m, a margin of -2.5%. Net losses amounted to -€918m.

Siemens Gamesa stated that the FY20 results reflect the continuing slowdown in the Indian market and cost overruns on project execution in Northern Europe, all accentuated by the impact of Covid-19. The global pandemic reduced revenues by c. €1bn, due to lower commercial activity and delays in project execution, and Covid-19 also impacted in EBIT pre PPA and before Integration & Restructuring costs by €181m.

To address these challenges, the company’s new management team, led by the CEO Andreas Nauen who was appointed in June, presented a new business plan for FY2021 - FY2023, with the stated goals of turning the Onshore business around and of maintaining profitable growth in the Offshore and Service businesses.

“Siemens Gamesa has started the new fiscal year with strong foundations to return the company to sustainable profitability. Measures underway will improve performance and enhance our strengths, positioning us for leadership in a wind energy industry that has a very bright future leading the fight against climate change,”
said Andreas Nauen during the earnings presentation.

In the offshore segment, Siemens Gamesa reportedly doubled order intake year-on-year to 4.1 GW. This boosted the backlog to 6.7 GW, plus 9.3 GW in conditional agreements. It followed the launch of the SG 14-222 DD turbine, and new markets in Asia and the Americas.

The company signed 2.7 GW in Onshore orders in Q4 20, partly recovering the business it had lost in the previous quarter and enabling total Onshore order intake in FY20 to reach 8.1 GW (-13.5% y/y).

Service was the fastest-growing division in FY20. The company stated that this was supported by the assets acquired from Senvion. Order intake increased by 53% y/y to €4.1bn during the year, boosting the fleet under maintenance by 23.7% y/y to 74,240 MW. As a result, Service now accounts for one half of the company's total backlog. The company has a 70% retention rate and the average contract duration is 8-9 years.

The company expects to achieve between €10,200m and €11,200m in revenues in FY21, and faster-than-market growth through FY23. The EBIT margin pre PPA and before Integration & Restructuring costs will be between 3% and 5% in FY21, reaching a margin between 8% and 10% in FY23.

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