Siemens Gamesa Sees 82% Growth in Orders, Despite Hard First Quarter

Siemens Gamesa has reported an 82% increase in orders intake, with firm orders rising to EUR 4,628 million in the first quarter of FY 2020.

Rising demand for wind power as a response to the transition towards non-polluting energies drove commercial activity for Siemens Gamesa in the first quarter of FY 2020. The company has reported an 82 percent increase in orders intake, with firm orders rising to EUR 4,628 million, raising the order book to a record EUR 28,089 million, underlining solid long-term growth prospects. 

As announced previously in a regulatory disclosure, the company experienced an unforeseen EUR 150 million impacts from costs on five onshore projects (1.1 GW) in northern Europe, mainly Norway, caused by adverse road conditions and the unusually early arrival of winter weather, which delayed project execution substantially.

As a result, the firm has adjusted its profitability target by one percentage point and expects to end the fiscal year with an EBIT margin before PPA, integration and restructuring costs of between 4 percent and 6 percent.

“This was not an easy quarter. The company’s financial performance fell short of the expectations we had when we set our targets for the year. However, this was a one-off impact and we do not expect it to recur in future quarters as we are taking the necessary measures. We have stepped up risk analysis to ensure project execution is on track and we will also strengthen our internal control system to avoid a recurrence,” said Markus Tacke, CEO of Siemens Gamesa.

“The results also underlined the long-term opportunities for wind energy and Siemens Gamesa. We are in an industry with huge potential and we are taking advantage of this with an intense commercial activity that resulted in a record order book. Moreover, the acquisition of strategic assets from Senvion will boost our service business, where margins are higher,” added Tacke.

Key Highlights (Commercial Segment):

Commercial activity increased significantly in the offshore segment, with order intake in the last twelve months doubling to 3,343 MW. Of that figure, 1,279 MW were signed in the first quarter. Siemens Gamesa is the clear leader in this segment, with a pipeline of projects totaling 9.6 GW.

Onshore also registered very positive commercial activity, with order intake up 8.1 percent to 2.6 GW. China (18 percent) and Canada (16 percent) were the main sources of orders in the quarter. Moreover, almost half of the orders were for the new models of turbines over 4 MW.

Service attained an extraordinary level of commercial activity, with order intake reaching EUR 1,470 million in Q1 FY2020, four times the figure in Q1 FY 2019. This business unit, which has very profitable contracts, accounts for 46 percent of the company’s order book.