Wind turbine OEM Siemens Gamesa Renewable Energy is targeting profitability over volume, with the objective of growing faster than the market and delivering better margins
In a capital markets day presentation, newly-appointed chief executive Andreas Nauen said the company’s new strategy “would unleash its full potential” by capturing growth opportunities in its profitable offshore and service businesses and by securing a turnaround in its onshore busines. The strategy will prioritize profitability over volume, cash generation and efficiency and productivity.
In June 2020, the wind turbine manufacturer parted company with its former chief executive Markus Tacke, a move attributed to problems at the company’s onshore division. At the time, it communicated that project costs and the financial impact of Covid-19 would result in a negative EBIT in the third quarter.
Mr Nauen told the meeting: “It has been a tough period for the industry and the company, but I am confident we have all the right components in place.”
While wind turbine manufacturers’ margins have been eroded by external factors – such as the introduction of auctions, global trade tensions, and the disruption caused by Covid-19 – the long-term outlook for wind power is very favourable, the company said.
“We have a strong, profitable, competitive position in the growing offshore and services markets, and there is very significant potential in our onshore business that we will realize through the turnaround process now underway,” Mr Nauen said.
“A new management team has been appointed to lead the turnaround. In addition, through our new core shareholder, Siemens Energy, we will be part of an energy powerhouse, and we expect to be able to benefit from strong synergy potential,” he said.
The new strategy is based on three pillars: innovation in terms of product portfolio and business offering; productivity through cost optimisation and strict cash management; and operational excellence in project execution and in health and safety. Digitalisation and sustainability will be at the heart of the programme, as enablers and differentiating factors.
The company said the offshore segment is expected to achieve strong growth in European markets and in emerging markets such as Taiwan and the US. On the back of this growth potential, installations of more than 180 GW are expected between 2020 and 2030.
Siemens Gamesa will continue to develop its technology, based on innovations such as the new SG14-222 DD turbine. Siemens Gamesa is also well positioned in the service segment, which is projected to achieve 8% CAGR through 2025.
Onshore industry forecasts predict stable long-term demand, with an estimated level of annual installations of 55 GW through 2025, growing to more than 65 GW in 2030. Siemens Gamesa said it has ‘defined a clear roadmap’ to return this part of the business to sustainable profitability. To drive the turnaround, the company will also focus on delivering competitive technology, including the 5X platform, reducing the complexity of its supply chain and rightsizing its structure.
Some measures are already under way, such as the achievement of the first orders for the new platform, the initiation of restructuring measures in India and the adaptation of its manufacturing footprint to demand in the EMEA region.