Investors are fleeing papers
Gamesa buckles in the headwind – Siemens Energy in the wake
1/21/2022 3:33 p.m
The wind turbines have been paid for by customers for months, but costs have been rising for some time. Added to this are the global supply chain problems and overly ambitious plans. All in all, Gamesa has to cut its forecasts and at the same time pulls the mother Siemens Energy down.
The Spanish wind power subsidiary Gamesa is becoming more and more a billion dollar grave for the energy technology group Siemens Energy. For the third time in nine months, Siemens Gamesa has to cut back on the forecasts and will probably not get out of the red in the new 2021/22 fiscal year (at the end of September). Because of the problems in Spain, Siemens Energy also closes the first quarter with losses and has to correct its expectations.
Gamesa CEO Andreas Nauen blamed difficulties in ramping up the new 5.X turbines for onshore wind turbines for the losses. This has escalated with longer-lasting bottlenecks and delays in supplier parts. Nauen now wants to take countermeasures with higher prices and the abandonment of risky projects.
Investors were shocked. Siemens Gamesa shares collapsed in Madrid by up to 16 percent, the Siemens Energy shares listed in the leading German index Dax also fell by up to 16 percent to their lowest level since October 2020. Also shares of Gamesa rivals Vestas and Nordex broke in.
Analysts from JP Morgan calculated that Siemens Gamesa would probably write losses for the third year in a row. You can’t invest in the industry as long as the companies don’t meet their expectations. Analyst Jacob Pedersen from the Danish Sydbank spoke of a “perfect storm”. The costs for the turbine manufacturers shot up, but the systems were paid for months ago. “It’s a huge challenge.”
Problem child instead of beacon of hope
At Siemens Gamesa, this added up to an operating loss of 309 million euros before special items between October and December. The logistics costs have exploded in recent months, said Nauen. Negotiations with customers about the price are difficult. But many gave in because they had little choice. But he also acknowledged homegrown problems: “Our development schedule was maybe a bit too optimistic here and there.” He wanted to stop projects that turned out to be too risky.
The wind subsidiary is supposed to be Siemens Energy’s great hope for the energy transition – but has been the problem child for years. CEO Christian Bruch had replaced the management of Siemens Gamesa again and hoped for a turnaround in the new fiscal year. The recent setback should fuel the debate about a complete takeover of Siemens Gamesa. Then the people of Munich could take better action than with a listed company in which they only hold 67 percent.
Due to the losses of the Spaniards, Siemens Energy also slipped into the red in the first three months of the fiscal year with an adjusted operating result (EBITA) before special effects of 63 million euros. A year earlier, a profit of 366 million euros had been posted. For the year as a whole, Bruch now calculates a drop in sales of up to two (previously: up to one) percent; In the best case, however, sales will increase by three percent as planned, because business with gas and steam power plants is going as planned.
Siemens Gamesa, on the other hand, expects sales to fall by up to nine percent despite full order books. The adjusted operating return on sales in the Group before special items should be between two and four percent; so far there has been talk of three to five percent. Bruch also puts a question mark over the goal of achieving an operating return of 6.5 to 8.5 percent as planned in the next 2022/23 financial year.