Siemens Gamesa Posts Second Profit Loss Warning; Shares Fall by 18%

The second profit loss warning came with a warning of the growing costs of raw materials for the wind energy industry, causing share prices of Siemens Energy, Vestas and Nordex to also fall; Siemens Energy may consider a complete takeover of Gamesa

Siemens Gamesa’s ‘typhoon-proof’ wind turbines at a onshore wind farm in Hokkaido, Japan. Credit: Siemens Gamesa website

Siemens Gamesa’s ‘typhoon-proof’ wind turbines at an onshore wind farm in Hokkaido, Japan. Credit: Siemens Gamesa website

Company has posted a second profit loss warning in less than a quarter causing its shares to plummet by 18%. The wind turbine manufacturer has been set down by rocketing prices of raw materials and the high costs of delivering its new platform for onshore wind to customers. The profit warning loss impacted Siemens Energy as well, which is a majority shareholder in Siemens Gamesa. Siemens Energy shares dipped by 13.5% and it will also miss its own profit target.

The company’s profit loss signaled a global decline in raw materials. This created a knock-on effect on Vestas and Nordex, which are competitors to Siemens Gamesa and also experienced a price drop in their shares. Vestas, which is currently a world leader in the manufacture of wind turbines saw its shares fall by 6.5% while Nordex, a smaller rival based in Germany saw its shares fall by 4.9%.

Siemens Gamesa’s financial woes might prompt its parent company, Siemens Energy to launch a complete takeover. Currently, Siemens Energy owns 67% of the stocks in Siemens Gamesa. Given the current price of its shares, the remaining stake of 33% will cost Siemens Energy around €5 billion. So far, the parent company has kept an arm’s length from its subsidiary, but it might increase its influence now.

Company’s losses began this year in January. Raw materials prices were further hit by the pandemic, causing the company to lose almost a third of its market share so far. Although the company remains the world’s biggest manufacturer of wind turbines, it has failed to manage the costs of developing its new onshore wind farm platform. Siemens Gamesa has felt this difficulty particularly in Brazil, where it has experienced supply chain shortfalls and logistical bottlenecks.

Andreas Nauen, CEO of Siemens Gamesa is optimistic that the company will be able to achieve a profit margin of 8-10%, but it will probably be delayed from 2023 to 2024.

 

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