Siemens Gamesa doubled net income to €88 million in the first nine months, with sound commercial activity driving the backlog to more than €25 billion

Siemens Gamesa doubled net income to €88 million in the first nine months, with sound commercial activity driving the backlog to more than €25 billion
FILE PHOTO A model of a wind turbine with the Siemens Gamesa logo is displayed outside the annual general shareholders meeting in Zamudio Spain June 20 2017 REUTERSVincent WestFile Photo
Published: 30 July 2019 - 9:39 a.m.
By: Baset Asaba

Siemens Gamesa Renewable Energy (SGRE) today reported the results of the first nine months (October-June) and the third quarter (April-June) of fiscal year (FY) 2019.

Revenue increased by 12% year-on-year in the first nine months of FY 2019, to €7,283 million, and by 23% year-on-year in the third quarter, to €2,632 million, driven by strong performance in all businesses, with record activity in offshore.

The company ended the first nine months of FY 2019 with EBIT pre-PPA and integration and restructuring costs of €475 million, equivalent to an EBIT margin pre-PPA and integration and restructuring costs of 6.5%. In the third quarter, EBIT pre-PPA and integration and restructuring costs amounted to €159 million, equivalent to an EBIT margin pre-PPA and integration and restructuring costs of 6.1%. The main impact on profitability was persisting lower pricing in the order backlog during the period, emerging market volatility and execution challenges in some onshore projects, partly offset by synergies, improvements in productivity and higher year-on-year sales volume.

The company doubled net income to €88 million in the first nine months of FY 2019, while net income in the third quarter was €21 million. Net debt amounted to €191 million at 30 June, driven by the increase in working capital ahead of peak wind turbine activity in the fourth quarter.

Performance is in line with the guidance range for FY 2019 (revenues of €10,000-€11,000 million and EBIT margin pre-PPA and integration and restructuring costs of 7-8.5%), despite the third quarter being affected by emerging market volatility and execution challenges in some onshore projects. Although short-term headwinds temporarily hamper group margins, Siemens Gamesa’s long-term prospects remain solid thanks to a record backlog, geographical and business diversification and one of the most competitive product portfolios, both onshore and offshore.

The company will update on its competitive business strategy and performance in a Capital Markets Day during the first half of 2020.

Strong commercial activity

Commercial activity remained sound during the period, supported by strong growth in all business units, particularly new offshore markets such as Taiwan. The company attained a record well-balanced backlog of €25.1 billion (+8% YoY), driven by its highest-ever single-quarter order intake, amounting to €4.7billion, up 42% YoY, and sound order intake in the last twelve months amounting to €12.3billion, up 2.2% YoY. This lends visibility to the remainder of the fiscal year, with 98% of the mid-point of the revenue guidance covered at the 9-month mark.

Despite this complex short-term industry environment, long-term prospects remain positive, with average annual wind installations set to roughly double through 2040, according to the International Energy Agency. Siemens Gamesa is well positioned to benefit from growth drivers due to its leadership in offshore and strong position in emerging onshore markets.

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