Siemens Gamesa allocated investment grade credit ratings

Siemens Gamesa has been assigned an investment grade credit rating by three leading financial services companies, indicating its ability to repay issued debt.

Siemens Gamesa unveiled its SG 10.0-193 DD offshore turbine in January
Siemens Gamesa unveiled its SG 10.0-193 DD offshore turbine in January

This story was first published on 7 May. It was updated on 22 May.

Standard & Poor’s (S&P) awarded the manufacturer a BBB rating on 7 May, suggesting the manufacturer has "adequate capacity to meet financial commitments", but investments in it would be "more subject to adverse economic conditions".

Meanwhile, Moody’s assigned the company a Baa3 rating, the lowest rating on its investment grade scale, as opposed to its non-investment grade range.

The financial services company’s rating indicates Siemens Gamesa has "moderate credit risk" and investments in the company "may possess speculative characteristics".

After Fitch gave the company a BBB long-term credit rating with a stable outlook towards the end of May, Siemens Gamesa's chief financial officer David Mesonero said it was the first time a "producer of wind generators (had been given) a credit rating from all the big three agencies".

Siemens Gamesa stated S&P was impressed by its "leading position" in both onshore and offshore wind markets, and its improved scale, installed base and technology, which "should help the group to increase market share and lead market consolidation".

It added that Moody’s highlighted Siemens Gamesa’s "high revenue visibility" due to its order book, "good regional diversification and moderate financial leverage".

Meanwhile, Fitch noted that its "geographical and industrial diversification" would "enable it to be close to the customer".

The ratings mean Siemens Gamesa has debuted in the public rating arena with an investment grade.

David Mesonero, the manufacturer’s chief financial officer, said: "This is a significant milestone for Siemens Gamesa and a recognition of our achievements.

"The ratings confirm our financial and industrial strength and will enable us to continue diversifying and optimising our funding sources."

Credit ratings represent the prospect that debt will be repaid. Companies receiving an ‘investment grade’ are generally understood to be likely to repay its issued debt.

Siemens Gamesa claimed the ratings from S&P, Moody’s and Fitch make it the first global wind turbine manufacturer to receive an investment grade rating.

Its manufacturing rival Vestas does not have a credit rating, while German firm Senvion was recently downgraded by both S&P and Moody’s after it filed for insolvency.

Moody’s also assigned Nordex a B3 CFR rating in January, suggesting investment in the manufacturer would be highly speculative.

However, Fitch Ratings affirmed a BBB- rating — the lowest investment grade it offers — for Chinese OEM Envision in February, and Moody’s gave Goldwind a Baa3 rating — the same grade it gave Siemens Gamesa — in July 2018.

SGRE results

Siemens Gamesa also announced it had achieved a record order backlog of €23.6 million as of the end of March 2019.

This was driven by an 11% year-on-year increase in services for the second quarter of the US fiscal year (January-March), it stated.

The manufacturer’s revenue for the first half of the 2019 fiscal year (October-March) increased 7% year on year to €4.65 billion, due to strong performance in its offshore and service divisions.

Its net income of €49 million for the second quarter of the financial year was up 40% from a year ago.

Siemens Gamesa stated that the increase in revenue and income were achieved despite declining prices in the order book — the €730,000/MW cost of wind turbines in the second quarter marked a 2% decline from a year earlier.

However, this was partly offset by improvements in productivity, synergies and fixed costs and a higher volume of activity in its offshore and services units, the manufacturer added.

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