Siemens Gamesa Renewable Energy’s chairman and chief executive have expressed confidence in the long-term prospects of the company, despite recent challenges
Those challenges saw Siemens Gamesa replace its chief executive and undertake a range of measures to enable it to return to profitability and address issues at its onshore turbine business.
Addressing the company’s annual general shareholder meeting on 17 March 2021, Miguel Ángel López, said the prospects for renewable energy “have never been more promising.” He said governments are prioritising green investment in their economic recovery strategies and there is a growing global commitment to decarbonisation. He also cited wind power targets set by a number of countries and by the EU as promising signs.
“Realisation of the immediate need to address the climate threat is driving a growing global focus on sustainability that provides bright prospects for our industry and our company,” he said. “I am optimistic about the future and look forward to what lies ahead. We will remain focused on disciplined implementation of our business plan and on achieving sustained value creation.”
Chief executive Andreas Nauen cited green hydrogen as another promising area in which Siemens Gamesa is involved, but said that despite a promising future for the company and the industry, “2020 was a tough year. In 2020, the company was adversely affected by the Covid-19 pandemic and by unexpected sharp declines in certain key markets such as India. Project management and execution issues also adversely affected performance.
“Our financial performance in Q1 was an encouraging sign, but really only the beginning,” said Mr Nauen. “The management team fully understands that there is much more hard work to be done to ensure that Siemens Gamesa becomes the profitable and successful company we know we have the potential to be.”
Earlier in the week, Fitch Ratings downgraded the company’s long-term issuer default rating to ‘BBB-‘ from ‘BBB’ after removing its rating uplift. The ratings agency described its outlook as ‘stable’ and said its business profile continues to be strong, reflecting strong market shares, especially in the fast-growing offshore wind market, good geographic diversification and economies of scale.
Of the offshore wind market as a whole and Siemens Gamesa’s role in it, Fitch said, “Siemens Gamesa is the clear market leader in the offshore wind market and has built up its expertise over the past five to seven years. We expect the offshore market to grow three or four times more quickly than the onshore sector. Siemens Gamesa has important advantages to capture this growth. General Electric Company is a strong competitor and Vestas is only just stepping into the offshore market.”
Fitch said it sees signs of a turnaround at the wind turbine OEM, with improvements in its business in the three months to the end of December 2020 (Q1FY21). “The wind turbine generator business returned to a positive adjusted EBIT and there was price stabilisation on new orders,” the ratings agency said. “The pandemic is still affecting operations but to a lesser extent, while a management reshuffle shows a commitment to project execution with better risk control. Profitability at the service business was boosted.”
“Siemens Gamesa remains one of the few companies that can compete on a global scale, along with Vestas, GE and Goldwind, and is able to withstand competitive cost pressures due to its size. Coupled with its centralised organisation and parent support, this provides advantages in sourcing and production and bargaining power over suppliers and customers.”
Fitch said that like Siemens Gamesa, it believes there will also be a supportive environment for the renewable energy market over the medium to long term due to increasing concerns about global warming and rising energy demand.
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