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Siemens Gamesa downgrades guidance citing higher costs – delays onshore break-even to 2023

The new outlook is mainly attributed to rising prices of raw materials as well as higher expected costs in connection with the manufacturer's 5.X platform.

Photo: Simon Walker / UK Treasury

Wind turbine manufacturer Siemens Gamesa downgrades its full-year guidance, with the revenue outlook now shooting for the lower end of the previously announced spread of EUR 10.2-10.5bn, as the OEM informed in connection with releasing its second-quarter report in April.

The group's earnings margin before interest and taxes is now projected to end between -1 and 0 percent against the prior interval of 3-5 percent.

These changes are chiefly tied to rising prices of raw materials and higher expected costs associated to Siemens Gamesa's 5.X platform – especially in Brazil, the company discloses in a statement, adding that the group has become increasingly affected by supply chain bottlenecks resulting from the Covid-19 pandemic.

At the same time, Siemens Gamesa releases several preliminary key figures for Q3 of the company's staggered fiscal year: EUR 2.7bn in sales, whereas estimates compiled by Bloomberg News show EUR 2.71bn.

Thus far, Q3 order intake is reportedly worth EUR 1.5bn – a figure impacted by volatility on the offshore wind market. The combined order book is revealed to have an approximate value of EUR 32.6bn.

Onshore to break even in 2023

The wind turbine manufacturer also no longer finds it probable that its onshore wind business will break even in late 2022.

The aforementioned higher costs now prompt the company to move the break-even year to 2023, said Siemens Gamesa Chief Executive Andreas Nauen during an investor teleconference after the guidance downgrade was revealed late Wednesday evening.

"In light of what we’re seeing now, achieving break even in the onshore business will be difficult or nearly impossible in 2022. Right now, we are reassessing our business plans – and we aim to break even one year later, in 2023," the CEO commented, adding:

"We are working to figure out how to realize that. Beyond contracts, it's of course highly dependent on material prices. We have exposure to our raw material, particularly for 2023, which I see as quite natural because it’s not possible to buy steel for 2023 contracts."

English Edit: Daniel Frank Christensen

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