Siemens Gamesa doubles earnings

The German-Spanish wind OEM reports a record order intake in its annual financial statement, in which the bottom line was doubled despite price pressure and a declining operating margin.
Photo: Siemens Gamesa/Marina Pacheco
Photo: Siemens Gamesa/Marina Pacheco

Revenue rose, operating income grew and the bottom line soared.

Siemens Gamesa's sales increased 12 percent to EUR 10.22 billion, and all divisions contributed. Revenue in the onshore wind division rose 7 percent, offshore wind 18 percent and service 17 percent.

The wind turbine manufacturer's operating result increased nearly 20 percent to EUR 253 million. Its operating margin came to 7.1 percent, thus falling within the company's expectations, which were set for 7-8.5 percent.

The bottom line revealed a profit that increased from EUR 70 million to EUR 140 million.

"There is no question that wind energy is coming of age and is now leading the energy transformation which is so critical to tackling climate change. These results show that we are successfully adapting to a changing industry and that our L3AD2020 strategy is on the right track to delivering long-term sustainable growth and leadership in our industry," says Siemens Gamesa Chief Executive Markus Tacke in a press statement on the annual report.

The wind OEM notes that there are solid prospects for growth in wind energy. Among other things, it refers to the International Energy Agency (IEA) having predicted the number of wind installations will double by 2040, and that EUR 5 trillion will be invested by 2050.

"Despite these strong prospects, price pressure is affecting the wind industry's margins and, consequently, is weighing on manufacturers' returns," writes Siemens Gamesa.

Improvement in orders

Order intake rose 7.4 percent compared to the previous fiscal year to EUR 12.7 billion. Siemens Gamesa can thereby celebrate the fact that its total order book is at a record high of EUR 25.5 billion.

In total, orders were placed for 9.39 GW of onshore wind, an increase of nearly 5 percent. The main contributors here are the US with 2.5 GW, 27 percent, and India with 1.8 GW, 20 percent. According to the turbine maker, the average sales price dropped 0.1 percent to EUR 0.73 per MW, prompting Siemens Gamesa to report an ongoing price stabilization.

Offshore wind orders grew 10.9 percent thanks to new markets. Among these, Taiwan is the main contributor with its 1.5 GW. Total order intake at sea amounted to 3.1 GW.

The service division also reports improvements. Here, order intake rose 13.4 percent to EUR 2.71 million. Service now represents 47 percent of the company's combined order book with EUR 11.9 billion.

Expects drop in operating margin

Siemens Gamesa still expects the fiscal year 2019/2020 to be a transitional year, in which revenue will come to EUR 10.2-10.6 billion, while the operating margin will land at 5.5-7 percent.

It's worth noting that these expectations exclude the firm's recent acquisition of Senvion assets.

Expectations for the future, however, are somewhat higher, as Siemens Gamesa is confident that from 2022 and onward it will book an operating margin of 8-10 percent.

English Edit: Jonas Sahl Jørgensen

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