Siemens Gamesa Sinks In Spain Stock Market After Launching A Profit Warning

FILE PHOTO: A model of a wind turbine with the Siemens Gamesa logo is displayed outside the annual general shareholders meeting in Zamudio, Spain, June 20, 2017. REUTERS/Vincent West

Siemens Gamesa has revised down its forecasts for 2021, with an estimate of sales that will be between 10,200 and 10,500 million euros, in the lower part of the expected range . With a few minutes late, its actions have reacted with virulence and it is close to its worst day on the market since July 30, 2019 (that day it was 17.65%). The sector has also been affected in the stock market due to the carry-over effect. Solaria, Soltec, Grenenergy and Acciona Energía have come to trade with significant drops.

This revision is due to the fact that it will make ” provisions for onerous projects ” affected by the “accused” increase in the prices of raw materials and the higher costs associated with the launch of its 5.X platform.

The company stressed that the impact of these factors “has been exacerbated by the pandemic”, especially in countries such as Brazil, where Siemens Gamesa claims to face ” supply chain deficiencies and bottlenecks related to execution.”

For this reason, the group has decided to update its market guidelines for 2021, also adjusting the operating margin ( ebit before PPA and I&R costs) to a range of between -1% and 0%.

Also, and with regard to the results of its third fiscal quarter, which will be published on July 30, preliminary data point to sales of 2,700 million euros and operating losses of 150 million euros .

Provisions of 229 million
As explained by the company, the reevaluation of the profitability of the wind turbine order book as a consequence of the aforementioned factors has forced the group to make provisions for onerous contracts of some 229 million euros in the third quarter.

The impact, the company specifies, is mainly concentrated in the first projects with the 5.X platform in Brazil with delivery in 2022 and 2023.

Siemens Gamesa estimates that net debt for the third quarter will be 800 million euros and that order intake amounted to 1,500 million euros, being affected by “the standard volatility of the offshore market.” Thus, the group’s total order book it would be at the end of the third quarter at 32,600 million euros.

The group has also assured the CNMV that it continues its efforts to achieve sustainable profitability and that the ongoing measures on costs and efficiency “will be intensified especially for the 5.X platform”.

“The performance of the offshore business units and services remains strong,” adds the company, noting that its long-term potential and strategic framework remain unchanged due to the role of wind energy in the energy transition and “the strong positioning of the company in all market segments “.


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