Siemens Gamesa Impresses In Successful Fourth Quarter & Full-Year 2018

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Siemens Gamesa Renewable Energy published its financial earnings for its fourth quarter and full-year 2018 this week, revealing successful growth across the business and revenues in line with previously offered guidance, which resulted in the company’s shares jumping 12%.

The company’s financial year runs from October to September, bringing its fourth quarter to a close earlier than most. As such, Siemens Gamesa reported full-year revenue of €9,122 million, in line with the company’s guidance even though it was slightly down on a year ago (though, worth noting, the fourth quarter and full-year 2017 was only the company’s second quarter after its successful merger in April 2017). Net income for the full-year 2018 reached €70 million which included the impact of integration and restructuring costs which together amounted to €176 million.

Order intake for the full-year 2018 increased to an impressive €11,872 million, up 9% year-over-year, supported by an increase in onshore order intake which increased 30% to €6,682 million, while offshore order intake rose to €2,795 million, including the company’s largest ever offshore order announced in June for the 1,386 megawatt Hornsea Project Two offshore wind farm, for which Siemens Gamesa will provide 165 of its SG 8.0-167 DD wind turbines.

The company also finished the year with a record order backlog of €22.8 billion, up 10% year-over-year, and “providing enhanced visibility for 2019 and beyond and reaching revenue coverage of 80% for FY 2019.”

As for the company’s fourth quarter, revenue grew to €2,619 million, which was up 12% year-over-year and up 22% on the previous quarter. The quarter was bolstered by the recovery of onshore volume and a high level of offshore project execution and helped push net income to €25 million.

Looking forward, Siemens Gamesa has provided guidance for the full-year 2019 of revenues in the range of €10 to €11 billion, with an EBIT margin of 7-8.5%, and placed the company on track to meet its full-year 2020 targets based on financial framework launched at CMD.

“A return to order intake growth for onshore wind products in Siemens Gamesa’s fiscal 4Q ending September is building revenue visibility and supports the company’s new guidance for fiscal 2019 of 10-11 billion euros vs. 9.1 billion euros this year,” said James Evans, a Global Clean Energy Analyst for Bloomberg Intelligence who provided me with his commentary via email. “Markets in which Gamesa has historically been strong supported the return to order growth, including Brazil, Spain, India and South Africa. While prices will remain competitive, an improvement in the price of order intake in 4Q shows some market stabilization.

“Sales were slightly below consensus in 4Q on some project delays restricting revenue recognition, yet the surging order intake and improved guidance offset near-term weakness. Cost-cutting progress was evident in 4Q, which, alongside strong service profitability, drove reported Ebit margin higher.”

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Joshua S Hill

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