Siemens Gamesa closes fiscal year 2019 with a record order book of €25.5bn (+12% YoY), as wind power is increasingly recognised as critical to the fight against climate change. The company also strengthen its balance sheet with a net cash position of €863m at the end of FY 2019, up €248m YoY.
Siemens Gamesa closed the fiscal
year ended September 30 with a record order backlog, while strong sales
activity in all three business units contributed to a 12% year-on-year
revenue increase at the wind turbine manufacturer. Despite strong
headwinds in the sector, which is experiencing pricing pressure, rising
costs and regulatory uncertainty in certain markets, the company
delivered an EBIT margin pre-PPA and integration and restructuring costs
of 7.1% in line with its guidance to the market.
The order backlog at Siemens Gamesa rose 12% year-on-year to €25.5bn as
its order intake grew by 7.4% to €12.7bn. Revenue grew to €10,227m,
while the company doubled its net income to €140m compared to FY 2018.
The company is focused on increasing profitability and competitiveness
in a complex environment for wind turbines.
“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,” said Markus Tacke, CEO of Siemens Gamesa. “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.”
Record commercial activity
Siemens Gamesa logged strong order intake in the Onshore business:
9,389 MW (+4.8%). The main contributors to this performance were the US
(27%) and India (20%), followed by Chile and China (7% each).
The Offshore unit registered double-digit growth (+10.9%) due to new
markets, mainly Taiwan, which contributed 1.5 GW in firm orders.
Meanwhile, Service orders increased by 13.4% in FY 2019, to €2,715m.
This business unit, which contributes with very profitable contracts,
accounts for 47% of the company’s order book.
Results in line with guidance
All business units increased revenue compared to last year: Onshore
by 7%, Offshore by 18%, and Service by 17%. This solid performance
reflects the growing worldwide recognition that accelerating investment
in clean energies is vital to respond to climate change, which has
become the focus of significant public and institutional attention in
2019.
Consequently, wind power has strong potential and significant growth
opportunities in the long-term. According to the International Energy
Agency, average annual wind installations will practically double by
2040, with €5 trillion of investment by 2050.
Despite these strong prospects, price pressure is affecting the wind
industry’s margins and, consequently, is weighing on manufacturers’
returns. In this adverse environment, Siemens Gamesa fulfilled its
profitability targets thanks to its transformation programme, which
helped to achieve above €1,400m in cumulative savings. As a result, its
EBIT before PPA and integration and restructuring costs increased by
4.6% YoY to €725m, equivalent to an EBIT margin of 7.1% before PPA and
integration and restructuring costs.
Siemens Gamesa also strengthened its balance sheet in FY 2019,
optimizing its debt structure and improving its cash position by €248m,
thanks in particular to improved working capital, enabling it to end the
year with a net cash position of €863m.
The company is also implementing a green funding strategy to position
itself as one of the main drivers of sustainable development. “We are
taking the lead in green finance, showing that sustainability can be
present in every step we take as a company. In fact, our wind turbines
produce clean energy for millions of homes and contribute to combating
climate change, one of the main challenges that we currently face,” said
David Mesonero, CFO of Siemens Gamesa.
| Siemens Gamesa key figures (€m) | FY 2019 (Oct. 18-Sept. 19) | Chg. FY 2019. YoY | Q4 FY 2019 (Jul. 19-Sept. 19) | Chg. Q4 FY 2019 YoY | Guidance FY 2019 |
| Revenue: | €10,227 | 12,1% | €2,944m | 12.4% | €10,000-€11,000 |
| EBIT before PPA and integration and restructuring costs: | €725 | 4.6% | €250 | 16.2% | |
| Reported EBIT: | €253 | 19.8% | €67 | -8.2% | |
| EBIT margin before PPA and integration and restructuring costs: | 7.1% | -0.5 p.p. | 8.5% | 0.3 p.p. | 7-8.5% |
| Reported net income: | €140 | 100% | €52 | 104.1% |
Prospects for FY 2020 and cost controls
The adverse factors affecting the wind industry will persist in the
short term, despite solid future prospects. Consequently, FY 2020 is
expected to be a transitional year, with revenues projected between
€10,200m and €10,600m, and an EBIT margin of 5.5%-7% *. In the longer
term, Siemens Gamesa expects to achieve an EBIT margin of 8%-10% from FY
2022 onwards. Further details will be given at a Capital Markets Day to
be held in the first half of 2020.
In this context, Siemens Gamesa’s goal is to enhance competitiveness to
maintain its leadership in the sector and secure profitable growth in
the long term. This in turn will enable it to respond better to its
customers’ needs in a changing industry. To help achieve this goal, the
company announced a programme to adjust its structure that will result
in a reduction of its global team of up to 600 white collar headcount
worldwide over the next two years. Consultations with workers’
representatives began this morning with a view to reaching an agreement
over the coming weeks.
Siemens Gamesa has a highly resilient business model thanks to its
business mix, geographical diversification and balance sheet strength.
The company is well placed to benefit from this growth because of its
lead in the Offshore segment and its strong footprint in the Onshore
segment in emerging markets.
Additionally, its recent agreement to acquire a selection of Senvion
assets evidence the company’s leading position in the next round of
industry consolidation. Siemens Gamesa will strengthen its competitive
position in the fastest-growing, high-margin Service business, expanding
the fleet under maintenance by 15%, from 60 GW to 69 GW. This deal will
also contribute to expanding its footprint and supply chain through the
acquisition of the Portuguese Vagos blade plant. This facility will
reduce dependency on supplier sourcing from Asia, mitigating volatility
amid the uncertainties brought about by current trade issues.
