- Siemens Gamesa’s performance in the third quarter reflected the impact on backlog profitability of rising commodity prices and the higher-than-expected ramp-up costs for the 5.X platform. That impact — exacerbated by the pandemic, especially in Brazil — resulted in a provision for onerous contracts related to projects to be executed in FY22 and FY23.
Consequently, Siemens Gamesa adjusted its guidance for financial year 2021 with an EBIT margin pre-PPA and before Integration and Restructuring (I&R) costs in the range of -1% to 0%, and group revenue expected to be at the low end of the range announced during the presentation of results for the second quarter (April 30, 2021): €10.2bn to €10.5bn.
“We are operating in what is currently a very difficult environment and have taken additional steps to balance our risk profile as we focus on delivering long-term sustainable profitability. Despite current challenges, the company is soundly placed to take advantage of the huge potential of wind energy, which is reflected in our strong order backlog. Our industry has bright prospects ahead, supported by a growing political and public commitment to fighting climate change by moving to a zero carbon emission future,” said Andreas Nauen, Siemens Gamesa’s Chief Executive Officer.
As the company continues to strive for sustained profitability, in Q3 21, Siemens Gamesa began to introduce clauses into its Onshore contracts to protect against commodity price volatility (mainly in steel towers). In addition to such mechanisms, Siemens Gamesa continues to incorporate cost inflation into contract pricing and to ensure the necessary procurements to execute its backlog in FY22.
Author: Bryan Groenendaal