Siemens Gamesa’s new chief executive Andreas Nauen has told shareholders that the company will be obliged to report a negative EBIT for the third quarter of the year due to coronavirus-related disruptions.
Speaking at the firm’s annual shareholders’ meeting in Bilbao, Spain, Nauen said that EBIT was expected to recover in the fourth quarter, but that it was too early to tell what impact the coronavirus pandemic would have on the business in the medium term.
The company is planning to announce a new three-year business strategy later this year to help it overcome current market challenges, Nauen added.
Like other wind energy OEMs, Siemens Gamesa’s operations were hit by the outbreak of the coronavirus and subsequent lockdowns in Asia and Europe.
The company has also been challenged by problems with project execution in Northern Europe and issues in the Indian onshore wind market.
However it forecasts a strong outlook for the global wind energy sector due to growing political will to combat climate change, the European Green Deal and a global push to incorporate sustainable technologies in the economic recovery.
“We are optimistic about the long-term outlook for the wind industry,” said Nauen. “However we need to see a turnaround in the business and a return to maximum performance.”
Siemens Gamesa will focus on improving its project execution capabilities, managing risk and adjusting its business to improve profitability over the coming months, Nauen added.
A record order backlog of €28.6bn, good financial performance in 2019 and a strong technology offering in the offshore and onshore wind sectors put the company in a good position for the future, Chairman of the Board Miguel Angel Lopez told shareholders.
Siemens Gamesa’s service business – recently boosted by the acquisition of key Senvion assets – would also help the company’s recovery, Lopez added.
The Covid-19 pandemic, trade tensions and price pressure were affecting “even the biggest and strongest” players in the global wind energy sector, Lopez noted, with further market consolidation expected in the future.
“We saw sharp consolidation in 2019 and expect to see further M&A activity, with only a handful of robust players left in the market alongside the Chinese OEMs,” Nauen said. “Only companies able to adapt and those that are financially robust will be able to survive.”
Siemens Gamesa reported in May that Covid-19 caused direct losses of €56m in the second quarter of 2020, mostly affecting its onshore wind business. The losses intensified other challenges facing the company and forced it to withdraw guidance issued in the first quarter of the year.