Financial Statements October 2021 - June 2021....................................................
Alternative Performance Measures .........................................................................
Glossary & Definitions for Alternative Performance Measures..................
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Siemens Gamesa1 reported €2,704m in revenue at Group level (+12% y/y) in the third quarter of fiscal 2021 (Q3 21), with an EBIT margin pre PPA and before integration and restructuring costs of -5.6%.
The EBIT margin pre PPA and before integration and restructuring costs in Q3 21 was affected by the impact of the raw material prices increase and by the higher than expected ramp-up cost for the Siemens Gamesa 5.X platform on the profitability of the WTG backlog. The persisting pandemic contributed to exacerbating the impact of both factors, particularly in projects in Brazil for delivery in fiscal year 2022 (FY22) and fiscal year 2023 (FY23), that resulted in a provision being booked for onerous contracts in the amount of c. €229m (equivalent to c. 8.5% of revenue in the quarter).
It is important to note that, apart from incorporating cost inflation into commercial contracts, the company is working on additional mechanisms, such as indexation clauses to steel towers in Onshore, to reduce risks due to volatility and high prices on commodities. It also continues to implement cost savings and technology improvement programs to reduce the impact of higher input costs on the cost of energy of the various platforms.
Revenue in the first nine months of 2021 (9M 21) amounted to €7,335m (+11% y/y) and EBIT pre PPA and before integration and restructuring costs totaled €81m, i.e. an EBIT margin of 1.1%. This performance is impacted by the provision for onerous contracts in Q3 21 that offsets the strength of the Service activity and of project execution in the Offshore market.
Including integration and restructuring costs (€31m in Q3 21) and the impact of the PPA on amortization of intangibles (€56m in Q3 21), reported EBIT in Q3 21 amounted to -€238m and net income attributable to SGRE equity-holders amounted to -€314m. Reported EBIT in 9M 21 amounted to -€243m, including the impact of integration and restructuring costs (€149m) and of the PPA on amortization of intangibles (€175m). Reported net income in 9M 21 was -€368m.
Siemens Gamesa's net financial debt position stood at -€838m at the end of June 2021. The increase in net debt in 9M 21 was due partly to an increase in working capital, which ended the period at -€1,621m, equivalent to -16% of revenue in the last twelve months, and also to an increase in lease liabilities2. As of June 30, 2021, Siemens Gamesa had c. €4,450m in funding lines, against which it had drawn c. €1,400m, and total liquidity amounted to c. €4,450m (including cash on the balance sheet of c. €1,400m at the end of 9M 21). Siemens Gamesa maintains an investment grade credit rating: BBB from S&P (stable outlook) and BBB- from Fitch (negative outlook).
As for commercial activity, the Group ended Q3 21 with a backlog of €32,561m, i.e. €1,100m more than in June 2020, having signed orders worth €1,520m in Q3 21 and €11,864m in the last twelve months. Order intake in Q3 21 and its trend year-on-year reflect the volatility of the Offshore market, which affected order intake in both WTG and Service.
Following the company performance in 9M 21, and particularly due to the provisions for onerous contracts impact, Siemens Gamesa has decided to adjust its guidance for fiscal year 2021 (FY21) as follows:
Group revenue for FY21 is expected to be at the low end of the range communicated together with the results of the second quarter on April 30, 2021 (€10.2bn-€10.5bn).
Group EBIT margin pre PPA and before I&R costs for FY21 is adjusted to a range of -1% to 0%.
With regard to ESG, it should be highlighted that during Q3 21, Siemens Gamesa:
Became the first wind turbine manufacturer to receive an ESG rating from S&P, obtaining a score of 84/100.
Ranked #1 in its sector (Oil & Gas - Alternative Energy - Renewable Energy Equipment) according to FTSE Russell, with a score of 4.6/5, and has been part of the FTSE4Good indexes since 2005.
1Siemens Gamesa Renewable Energy (Siemens Gamesa or SGRE) is the result of merging Siemens Wind Power, which was the wind power division of Siemens AG, with Gamesa Corporación Tecnológica (Gamesa). The Group engages in wind turbine development, manufacture and sale (Wind Turbine business) and provides operation and maintenance services (Service business).
2Lease liabilities amounted to €822m as of June 30, 2021. Lease liabilities amounted to €611m as of September 30, 2020.
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Main consolidated figures Q3 21
Revenue: €2,704m (+12% y/y)
EBIT pre PPA and before integration and restructuring costs3: -€151m (N.A)
Net income: -€314m (N.A.)
Net cash/(Net financial debt - NFD)4: -€838m
MWe sold: 3,079 MWe (+17% y/y)
Order book: €32,561m (+3% y/y)
Firm order intake in Q3: €1,520m (-72% y/y)
Firm order intake in the last twelve months: €11,864m (-22% y/y)
WTG firm order intake in Q3: 1,376 MW (-66% y/y)
WTG firm order intake in the last twelve months: 11,169 MW (-13% y/y)
Installed fleet: 114,590 MW
Fleet under maintenance: 77,745 MW
Markets and orders
Renewable energy projects, including wind, continue to evidence considerable resilience against the persisting backdrop of the pandemic. The steady increase in decarbonization commitments and the role of renewable energy in economic recovery programs have had a very positive impact on demand prospects in the short, medium and long term. In this context, Siemens Gamesa signed orders worth €11,864m in the last twelve months, i.e. 1.2 times revenue in the period, and it ended Q3 21 with a backlog worth €32,561m (+3% y/y), €1,100m more than in Q3 20.
At the end of Q3 21, Service, which is more profitable, accounted for 50% of the backlog (i.e. €16,238m), having increased by 7% year-on-year. The WTG order book is split into €9,404m Offshore and €6,919m Onshore, both stable with respect to June 2020.
Figure 1: Order book at 06.30.21 (€m)
Figure 2: Order intake Q3 21 (€m)
Onshore Offshore Service
The Group's order intake amounted to €1,520m in Q3 21. This volume of orders is primarily a reflection of volatility in the Offshore market, where orders for both WTG and Service were heavily concentrated in the second quarter of this fiscal year (Q2 21), and also to the postponement to Q4 21 of the signature of the first contracts for the SG 3.4-145 platform in India, where 623 MW were signed in early July.
The backlog as of June 2021 allows a 100% coverage of the sales guidance announced for the year of c. €10,200m.
3EBIT pre PPA and before integration and restructuring costs excludes integration and restructuring costs in the amount of €31m and the impact on fair value amortization of intangible assets as a result of the PPA (Purchase Price Allocation) in the amount of €56m.
4Cash / (Net financial debt) is defined as cash and cash equivalents less long-term and short-term financial debt, including lease liabilities. The Siemens Gamesa Group adopted IFRS 16 effective October 1, 2019. Lease liabilities amounted to €822m as of June 30, 2021: €212m short-term and €610m long-term.
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Onshore commercial activity ended the quarter with 1,352 MW in new orders (+13% y/y) worth €840m (-4% y/y), i.e. a book-to-bill ratio of 0.6. The growth in order volume (MW) in year-on-year terms reflects the negative impact of the pandemic on Onshore commercial activity in Q3 20. Onshore order intake in the last twelve months totaled 8,538 MW worth €5,538m, i.e. a book-to-bill ratio of 1.1.
Figure 3: Onshore order intake (€m) LTM (%)
Figure 4: Onshore order intake (€m) Q3 21 (%)
EMEA Americas APAC
EMEA Americas APAC
Of the 45 countries that contributed new Onshore orders in the last twelve months, those that made the largest contribution, in monetary terms, were: US (19%), Sweden (13%) and Brazil (11%). They were followed by Canada and Spain (8% each). The main sources of new orders in Q3 21 were: Canada (34%), Japan (21%), Spain (14%), Philippines (10%) and Sweden and US (7% each).
Orders signed in Q3 21 corresponding to new platforms with a capacity of 4 MW or higher accounted for 67%. Orders taken for the Siemens Gamesa 5.X platform since its launch total 2.7 GW.
The standard volatility in the Offshore market resulted in order intake amounting to €146m in Q3 21, following the signature of the Sofia deal (1,400 MW) in Q2 21, ahead of schedule. Offshore order intake in the last twelve months amounted to €3,259m, i.e. a book-to-bill ratio of 1.0.
Siemens Gamesa continues to work very closely with customers to prepare for the large volume of auctions expected in 2021 (17 GW projected in the next six months in the Offshore market) and subsequent years, given Offshore wind's role as the top energy source for attaining the decarbonization targets.
In Q3 21, Siemens Gamesa landed a preferred supply agreement in Taiwan: Hai Long 2B (232 MW) and Hai Long 3 (512 MW). These wind farms, and the Hai Long A (300 MW) wind farm, will be equipped with the SG 14-222 DD turbine. As of June 30, 2021, the conditional backlog amounted to 7.8 GW.
The Offshore market's volatility also affected order intake in Service in Q3 21, which achieved orders worth €534m in the quarter, a book-to-bill ratio of 1.0.
Service order intake in the last twelve months amounted to €3,068m, i.e. a book-to-bill ratio of 1.6.
Table 1: Order intake (€m)
The average selling price in Q3 21 was negatively impacted by smaller project scopes, with more sales of reduced scope projects in the Americas and APAC, by the dilution caused by the increase in average platform capacity, and by a moderate currency effect. In contrast, it was affected positively by the country contribution in the EMEA and APAC regions and by an increase in prices in like-for-like terms.
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