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Spain

SGRE six-month revenue falls to €5bn

SPAIN: Siemens Gamesa Renewable Energy's revenues fell 12% year-on-year to €5 billion during the first six months since the two manufacturers merged, the company reported.

SGRE opened a blade factory in Tangier, Morocco, in October
SGRE opened a blade factory in Tangier, Morocco, in October

The recently-merged company attributed this drop to a temporary upheaval of the Indian market while the subcontinent transitions to an auction system.

Without this impact, the fall in revenues would have been just 2%, SGRE said. 

Its underlying earnings before interest and tax (EBIT) fell 18% to €774 million for the full fiscal year ending on 30 September, while its EBIT margin was 7%.

But in the half-year since the companies merged in April, underlying EBIT came to €192 million, a drop of 63.4% year-on-year, while the EBIT margin was 3.8%.

SGRE also announced it would be axing 6,000 jobs across 24 countries — but would not confirm where these cuts were taking place.

In a conference call, CEO Markus Tacke explained the results were impacted by market conditions.

These included adjustments to inventories in the US, the South African government deciding to "sign PPAs at lower levels than previously agreed", as well as the slowdown of the Indian market.

But Tacke also said that SGRE believed the Indian government’s plans to auction up to 4.5GW of wind capacity would have a "positive impact" on the industry.

"Our financial performance is still not at the level we’re all aiming for, but it’s clear that we are making positive progress as we carry out our plan to make this company an industry leader.

"Our integration efforts are proceeding ahead of schedule, and I’m confident that the decisions we’re making will allow us to better respond to changing market conditions, and to better serve our customers and other stakeholders," he added.

The company’s order intake increased by 40% to 3GW in the three months to 30 September, including 2.2GW of onshore orders, it said. SGRE currently has an order backlog worth €27 billion, Tacke added.

Siemens Gamesa stated that it has decided to have "one technology per business segment by 2020" but few details were given.

It also announced it would streamline its onshore product portfolio, reducing the range of products available by "approximately 65%", and that it would implement a single-platform strategy in the offshore sector.

New products would be unveiled at the upcoming WindEurope conference (28-30 November) taking place in Amsterdam later this month, SGRE stated.

The company also announced its outlook for the 2018 financial year: revenues of between €9 billion and €9.6 billion and an underlying EBIT margin of between 7% and 8%.

In a conference call discussing the results, CEO Markus Tacke also explained that:

- He believed the merger of Siemens and Gamesa in April has given the company "competitive advantages" of its "scale and global reach" and "diversification".

- A new tax bill launched in the United States’ Congress to cut the production tax credit (PTC) from its current $0.023/kWh to $0.015kWh would unsettle the market: "We do not believe that this proposal will be executed as it is in the proposal," he explained. "But we need to anticipate that the proposal will bring uncertainty in the market, and that will lead to delay of projects."

- "Stretching" existing turbine platforms is the company's "preferred" method of uprating turbines, because it "minimises risk for developers and OEMs and is more capital-effective". However, Tacke added: "At some point there is need for establishment of a new platform — we will elaborate on that at the Capital Market Day [in February]."

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