The German manufacturer had, just this month, reported one of its best quarterly order totals with firm onshore turbine order intake in Q1 2018 reaching €484 million, up 37% year-on-year.
Despite falling revenues, a trend reported by most other western OEMs in Q1, Senvion expects a back-loaded year, so a recovery is still on the cards. It also just launched a new 4.2MW turbine model for the US market.
When Geissinger took the role in December 2015, Senvion was less than a year into its newfound freedom following its €1bn sale as a subsidiary of Indian OEM Suzlon to US investment firm Centerbridge Partners.
Revenues in 2015 were just over the €2.1bn mark, a little higher than the €1.8 billion in 2017, but in a much bigger market, especially in its native Germany.
Therein lies the issue. Contraction of the German market has long been coming and it was Geissinger’s primary job to combat this.
Its Q1 order total was due to an almost eight-fold increase in intake from new markets, the manufacturer said, which grew from €31 million to €267 million in a year.
Looking at this, Geissinger could be forgiven thinking his work at Senvion is done. He guided the firm through a difficult patch, which included a faltering initial public offering. He can move on to find a new challenges elsewhere.
But many challenges still remain at the German manufacturer. Can it compete into the 2020s?
In 2015, Senvion secured a 3.36% global market share according to FTI, in 2017, this increased slightly to 3.7%.
Following GE’s takeover of Alstom, and the mergers of Nordex and Acciona, and then Siemens and Gamesa, Senvion is quickly being left behind by the other major OEMs, unable to compete on financial strength, or to make the necessary R&D investments in the current climate of auctions and tight margins, which requires squeezing the most out of every turbine.
Rumours of a merger or takeover are never far away, with CFO Manav Sharma — now in temporary control of the firm — stating owners Centerbridge would be open to some consolidation. According to investment firm Macquarie, Senvion would be a prime candidate for an Asian OEM, wanting to break out of its domestic market. This, of course, has been tried before with Suzlon, and did not end happily.
Geissinger may be getting out the way before a new owner comes in and wants to make its mark on the firm. But a deal doesn’t sound close.
There is also the development of Senvion’s 10MW+ offshore turbine, announced at AWEA 2017. A year later and it remains part of a EU-funded research programme involving several companies.
In the meantime, GE has announced some details of an 12MW model, with the industry fully expecting leaders Siemens Gamesa and MHI Vestas to at least match this in the next 12 months.
If Senvion is going to remain a key competitor in the offshore space, it’s going to need to bring out a new, competitive model and soon. There will be a market for it.
Senvion’s move to so many new markets is admirable but necessary. But it can’t stop at those nine new areas exploited under Geissinger’s reign. There are other areas it can, and should, look to — north Africa, south America — while not neglecting those it currently relies on.
That’s now the next CEO’s mission, whoever he or she may be. Senvion said it hopes to name a successor in the next month. The in-tray is already piling up.