Siemens Gamesa disappoints on earnings

Siemens Gamesa is lagging with disappointing bottom line results. The first quarter saw less revenue than analysts had forecast.
Photo: Fairwind
Photo: Fairwind

Revenue growth of 6 percent in Q1 2019 was not entirely enough to for Siemens Gamesa to deliver a quarterly report which lives up to analyst expectations.

On the bottom line, Siemens Gamesa has succeeded in landing a EUR 18 million net result, while analysts estimated EUR 25.1 million. EBIT landed at EUR 138 million.

The beginning of the year has otherwise seen strong activity for Siemens Gamesa, particularly within offshore wind turbines and service. However, the market for onshore wind has been more challenged by low prices and squeezed activities, announced the company, which also stresses that it expects increasing activity on land over the year.

First quarter order intake was valued at EUR 2.5 billion, and the onshore wind business saw a 7.7 percent growth in orders, landing at EUR 1.8 billion.

At the end of the period, the company had a order book valued at EUR 23 billion, 8 percent more than the same time the year prior. Of this, EUR 15.7 billion will be executed after the current fiscal year.

The average sale price for a Siemens Gamesa turbine has stabilized and sat at EUR 0.76 million per MW in the first quarter. The sales price in the previous quarter, Q4, was EUR 0.75 million per MW.

This continues the trend sparked by Siemens Gamesa and Vestas in the second half of 2018 – also confirmed when Nordex published its report in November last year. The German turbine manufacturer emerged with an average price for new orders of EUR 0.74 million EU / MW, 3.2 percent higher than the quarter prior.

Siemens Gamesa saw a two percent price rise in the first quarter.

Confidence in European market

Siemens Gamesa booked orders totaling EUR 2.54 billion and, despite a challenging onshore wind market in this sector, Europe remains the company's largest source of activity. In the first quarter, onshore wind turbines accounted for EUR 1.7 billion in orders, while offshore wind orders came to EUR 396 million and service EUR 346 million.

In the first quarter of 2019, Europe was the most important market for Siemens Gamesa with an order book of 965 MW, 379 MW of which came from its domestic market in Spain. North America and South America made a bid with 750 MW, while Asia and India secured 654 MW from Siemens Gamesa.

All of this indicates that Siemens Gamesa will focus particularly on Europe and the US and will look towards these markets for securing sustained growth in the upcoming quarters. In its outlook for the rest of the year, the company says that mature markets such as Germany and Sweden will see increasing activity for the rest of the year. Siemens Gamesa also projects positive expectations for Australia.

The fact that several offshore projects in tender phase in the US resulted in lower than expected bids is also a positive outcome according to the German-Spanish manufacturer, as more states now hope to increase the pace of the offshore wind construction.

The Brazilian market is a little more unpredictable due to the new government which has halted wind tenders, says Siemens Gamesa in the report.

English Edit: Lena Rutkowski

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