Energy company: Siemens Energy cashes in because of Gamesa profit forecast, share on the downside

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Supply problems:

The corona pandemic is slowing production in Brazil and leading to significantly higher costs for the wind power manufacturer Siemens Gamesa

Photo: Patrick Pleul / DPA

Again problems with the Spanish wind power subsidiary Siemens Gamesa thwart Siemens Energy's profit plans. Because the wind turbine manufacturer has to reckon with operating red numbers in the current 2020/21 financial year (end of September), the parent company will not achieve its return target either. The operating return on sales before special items will probably be below the targeted range of 3 to 5 percent in 2020/21, the energy technology group admitted on Wednesday evening. However, sales should increase by 3 to 8 percent as planned; Siemens Energy had already made cuts in this area three months ago.

Share prices came under significant pressure on Thursday. Siemens Gamesa collapsed by almost 14 percent, Siemens Energy by more than 9 percent. In addition, the mix of internal and external problems at Gamesa also carried away the other wind turbine manufacturers. The Nordex share lost almost 6 percent, Vestas lost a comparatively moderate 1.2 percent.

Siemens Gamesa had to accept surprising losses in the third quarter (to the end of June). Above all, the onshore wind turbine business, which has been ailing for a long time, has burdened business, it said. This leads to higher start-up costs for the new 5X platform, in which Gamesa had high hopes. Brazil, which has placed many orders for the platform, is particularly affected. Since there are also delivery problems there due to the corona pandemic, there are further project delays.

Brazil is one of the growth markets in the wind business, as is India.

There, too, Siemens Gamesa is struggling with considerable problems - because the turnaround has to be achieved, CEO

Andreas Nauen called

"challenging".

The head of the group, who has been in office for around a year, was primarily concerned with the restructuring of the loss-making wind turbine business on land and launched an extensive restructuring program.

On the other hand, business with systems at sea (offshore) and service continue to be robust.

Forecast lowered for the second time this year

The subsidiary of Siemens Energy had to lower the expectations for the return on sales before taxes and interest (EBIT) - already adjusted for special effects - for the second time this year, now to zero to minus one percent. So far, Siemens Gamesa had assumed a positive EBIT margin of 3 to 5 percent. Siemens Gamesa is writing off 229 million euros on unprofitable projects such as in Brazil. In the previous year, the Siemens Energy subsidiary had also been in the red with a return of minus 2.5 percent.

Siemens Gamesa's sales will be at the lower end of the forecast range of 10.2 to 10.5 billion euros in 2020/21, the statement said. Siemens Gamesa had already revised its sales expectations downwards three months ago. In the third quarter, sales were 2.7 billion euros and the adjusted EBIT was minus 150 million euros. In view of these figures, Siemens Energy will not meet the analysts' expectations in the third quarter, the German mother warned.

Siemens Gamesa is considered to be a great beacon of hope in the restructuring of the company, which so far has mainly earned its money with turbines for gas and coal-fired power plants.

In May, the rising number of incoming orders and government infrastructure programs had given Siemens Energy a confident vote in favor of the renewable energies business.

In the traditional business (gas and power) everything is going according to plan, announced Siemens Energy.

There, sales will grow by 2 to 6 percent in the current financial year, with an operating return on sales of 3.5 to 5.5 percent.

mg / Reuters