Siemens Gamesa's losses in the first nine months of its fiscal year soared to 1.226 billion euros, more than tripling the 368 million euros in the red that the group posted a year ago, the company informed the Spanish National Securities Market Commission (CNMV). The company said its third-quarter results were again affected by market volatility and delays in the supply chain, as well as by internal challenges that have mainly affected the onshore segment.
The wind turbine manufacturer resulting from the merger of Gamesa with Siemens' wind power division indicated that these record losses include the impact of amortization from the PPA and integration and restructuring costs, both net of taxes, for a total amount of 189 million euros
In this way, Siemens Gamesa, on which its main shareholder Siemens Energy has announced a takeover bid for 32.9% of the capital it does not own in order to delist it from the stock market, aggravates the situation it has been going through since 2020, when in the middle of the pandemic it entered a cycle of 'red numbers'. In that 2020, the company had record annual losses of 918 million euros and in 2021 the 'red numbers' were 627 million.
Siemens Gamesa's sales in the first nine months of its fiscal year amounted to E6,442 million, down 12%, and operating profit (Ebit) pre PPA and integration and restructuring costs was negative E957 million, equivalent to an Ebit margin of -14.8%. In the April-June quarter, the group's losses amounted to 446 million euros. Revenues in this third quarter amounted to 2,436 million euros, down 10%, while EBIT pre PPA and before integration and restructuring costs came to a negative 343 million euros, equivalent to an EBIT margin of 14.1%.
As of June 30, the net financial debt position amounted to -2,275 million euros. The company indicated that it has 4.45 billion euros in authorized financing lines, of which 2.651 billion euros have been drawn down. It also has total liquidity of E3,036 million, taking into account the cash position on the balance sheet at the end of the third quarter (E1,237 million).
Revises downward its targets
Despite this, the company, which has already issued three profit warnings, has set a new EBIT margin target of -5.5%, down from -4%, mainly due to component failures and repairs on previous models of onshore platforms. Despite this extremely complex scenario, the company led by Jochen Eickholt noted that its order book has risen to a record E33.98 billion.
Between April and June, the company signed orders worth E3,523 million, of which E2,094 million were in 'Offshore' (offshore wind), up 14.3 percent, and E1,068 million in 'Onshore', up 27 percent. It also added 361 million euros in Services, down 32%. Order intake during this quarter was 2.3 times higher than the figure recorded in the same period of the previous year.
In view of this situation, Siemens Gamesa stressed that it is taking "decisive steps to create long-term value" with its new strategic program 'Mistral', which aims to review the current operating model to achieve a "simpler and more agile organization that improves its efficiency and effectiveness".
In this regard, the company said it will maintain a business-focused structure, while strengthening the COO (Chief Operating Officer) and CTO (Chief Technology Officer) teams "to accelerate harmonization and standardization across Siemens Gamesa". As a result, the businesses will be focused on the areas of sales, project execution and product roadmap, and will be responsible for their income statements. The details of the new operating model will be defined by October 1.
Siemens Gamesa stressed that this new structure, which will come into effect on January 1, 2023, will enable the creation of a single roadmap for all businesses that facilitates the scalability of technology solutions across the company and reduces non-conformance costs (NCC) through harmonized processes, while focusing on Siemens Gamesa's core competencies. Siemens Gamesa CEO Jochen Eickholt felt that by establishing simpler processes, "we will encourage our teams to take more responsibility and learning cycles will be streamlined."
In addition, he estimated that this new structure "will accelerate the company's turnaround." "It will provide a clearer picture of our business activities and greater transparency about Siemens Gamesa's journey as a global leader in the renewable energy transition," he said.
'Mistral', a three-phase program.
The 'Mistral' strategic program will be rolled out in three phases from the short to the long term, spanning from 2022 to beyond 2025. In the short term, the priority will be to achieve maturity and cost assurance of the Siemens Gamesa 5.X onshore platform.
In the medium term, the company will establish an agile structure in key markets and improve competitiveness and profitability by increasing revenues.
By 2025, the company's goal is to optimize the product strategy and achieve a scalable operating model applicable to all three businesses - Offshore, Onshore and Services - combined with a robust supply chain in the face of market disruptions. With this new operating model, Siemens Gamesa indicated that it is poised to achieve significant cost synergies through potential integration within Siemens Energy.