Siemens Gamesa sunk to a €309m loss in its fiscal first quarter due to ongoing supply chain challenges and new issues with its 5MW onshore platform.
The German-Spanish manufacturer said in preliminary results that “ramp-up challenges” with the 5.X platform, “including some necessary design changes”, affected production and project execution schedule, contributing to the spilling of red ink that compared to a €121m profit in the same period last year.
The negative impact of these delays and changes in production plans has been exacerbated by the existing bottlenecks in the supply chain, it added.
Supply chain related disruptions “are now expected to last longer than previously anticipated” and are being affected by the continued impact of the COVID-19 pandemic.
“These supply chain tensions have resulted in higher than expected cost inflation, mainly affecting our Wind Turbine (WTG) segment. Also, volatile market conditions have impacted some of our customers’ investment decisions and, as a consequence, resulted in delays to some of our projects,” said the company.
The higher costs and the update of the assumptions for market and production conditions led to a negative EBIT impact in the amount of €289m in the first quarter of financial year 2022, “mainly due to cost estimate deviations in onerous contracts”.
In all Siemens Gamesa said its EBIT loss pre PPA and I&R costs was €309m
The contribution from the Offshore division remained positive, and Service delivered more than 20% profitability in the quarter, despite supply chain disruptions, and its negative impact on our operations.
Performance in the remainder of the year is expected to benefit from stronger activity levels and the positive performance of Offshore and Service businesses.
The company said it continues to work on cost optimization initiatives and implementing measures across the value chain to mitigate increases in logistic and supply chain costs.
Additionally, the Company is also working on other initiatives such as the potential sale of its wind farm development pipeline in Southern Europe that could have a positive impact on results.
Based on the first quarter performance and the outlook for the remainder of the year, Siemens Gamesa is adjusting its guidance for financial year 2022.
Group comparable revenue growth in financial year 2022 versus financial year 2021 is expected to range between -9% and -2% (previously revenue decline between -7% and – 2%). Meanwhile, group EBIT margin pre PPA and I&R costs is expected to range between -4.0% and +1.0% (previously between +1% and +4%).