Siemens Gamesa has downgraded its guidance forecasts for the financial year 2021, due to supply chain bottlenecks mainly related to the 5MW platform in Brazil.
Group revenue for financial year 2021 is expected to be at the low end of the €10.2-€10.5bn range communicated with the results of the second quarter on 30 April 2021, while group earnings before interest and tax (EBIT) margin pre PPA and before I&R costs for financial year 2021 is adjusted to a range of -1% to 0%.
The revision is mainly due to provisions for “onerous projects” affected by several “decisive factors”, which are the “sharp increase” of raw material prices and increased estimates of ramp-up costs for the Siemens Gamesa 5.X platform, especially in Brazil.
“The impact of these elements has been exacerbated by the pandemic, especially in countries like Brazil where we face supply chain shortfalls and execution related bottlenecks,” Siemens Gamesa stated.
All the aforementioned factors have been taken into account in the results of operations for the third quarter of financial year 2021.
As a result, preliminary earnings of the third quarter, to be published on 30 July 2021, are revenue of circa €2.7bn and EBIT pre PPA and I&R costs of approximately -€150m.
The reassessment of the profitability of Siemens Gamesa’s turbine order backlog due to the factors mentioned above has resulted in provisions of an estimated amount of €229m in this quarter.
Impact is mainly limited to the first Siemens Gamesa 5.X projects in Brazil for delivery in financial years 2022 and 2023.