Siemens Gamesa recorded a €229m loss in earnings before interest and tax for the first quarter of fiscal 2020, down from a profit of €40m in the year-ago period.
The German-Spanish manufacturer’s chief executive Markus Tacke (pictured, right) said the financial performance “fell short of…expectations” as the company revealed a difficult three months that included revenue of €2bn, down from €2.3bn.
EBIT before PPA, integration and restructuring costs was also in the red at €136m, down from €138m in the black for the first quarter 2019, EBIT margin was -6.8% from positive 6.1% and reported net income was -€174m, down from €18m.
The quarter was impacted by an “unforeseen” €150m impact on 1.1GW of northern European wind farms, which have been “delayed…substantially” due to adverse road conditions and the “unusual early arrival of winter weather”. The issue, which has led to a downgrade in FY2020 forcasts, was first revealed by the company last week.
“This was not an easy quarter for Siemens Gamesa,” said chief executive Markus Tacke.
“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.”
In a bright spot, the company reported an uptick in demand for wind power as a response to the transition towards non-polluting energy sources in the first quarter.
Order intake was up 82%, with firm orders rising to €4.6bn, raising the order book to a record €28bn, underlining “solid” long-term growth prospects.
Commercial activity increased significantly in the offshore segment, with order intake in the last twelve months doubling to 3,343MW. Of that figure, 1,279MW were signed in the first quarter. Siemens Gamesa is the clear leader in this segment, with a pipeline of projects totalling 9.6GW.
Onshore also registered positive commercial activity, with order intake up 8.1% to 2.6GW. China (18%) and Canada (16%) were the main sources of orders in the quarter.
Service attained an “extraordinary level of commercial activity”, said the company, with order intake reaching €1,470m in Q1 FY2020, four times the figure in Q1 FY 2019.
“We are in an industry with huge potential and we are taking advantage of this with intense commercial activity that resulted in a record order book,” added Tacke.
“Moreover, the acquisition of strategic assets from Senvion will boost our service business, where margins are higher.”