Outgoing Siemens Gamesa Renewable Energy CEO Andreas Nauen does not believe the cost pressures and supply chain disruptions that are battering turbine makers will subside by the end of 2023.
He told reporters that the company does not see cost increases for raw materials such as steel and copper easing by the end of 2023, while conceding that pricing for 2024 is “more or less impossible to predict”. Siemens Gamesa is one of several wind turbine manufacturers that has raised the prices of their products to offset cost inflation.
Nauen added that the company has not been not receiving electronic and mechanical components as ordered, which, in turn, is interrupting turbine production. This is mainly affecting nacelle production, rather than blade manufacturing, which is more dependent on materials such as fibre-glass, Nauen noted.
Nauen was speaking as the company lowered its guidance for its 2022 financial year, which runs from October 2021 to September 2022. It now expects an Ebit margin excluding the effect of integration, restructuring (I&R) and price purchase allocatio (PPA) of between -4% and 1%, having previously forecast 1-4%.
Siemens Gamesa had reported a loss of €309 million (Ebit, pre-PPA and I&R) in the first quarter of its financial year (October to December 2021).
Nauen was speaking as the company announced that he is to be replaced as CEO from 1 March by Jochen Eickholt, a board member at the turbine manufacturer’s majority owner Siemens Energy.
Siemens Gamesa has increased the price of its turbines so that it is “not the one taking the risk on cost inflation,” Nauen told reporters and analysts in a conference call.
The manufacturer is also ordering components in larger quantities and rescheduling orders in order to better manage shortages, he said.
“We remain immersed in a very complex market environment, with disruptions and low visibility in the supply chain,” Nauen said. “In this context, we continue taking measures to protect our profitability and adapt to these dynamics, which will persist in the coming months.”
Siemens Gamesa stated that it hopes such measures will support profitability. The company is also working on potential sale of its wind farm development pipeline in southern Europe, which should boost results, the company explained in a statement.
Nauen added: “The (wind power) sector is experiencing an extremely difficult earning cycle at the moment. It isn’t just Siemens Gamesa, and it isn’t just this quarter.
“We see OEMs remaining in a very difficult spot and struggling to be profitable. I believe that our value needs to extend beyond price: We bring a lot of benefits to society and the energy transition, including jobs creation in the countries that we work in.
“We also need to be financially sustainable so we can continue to create value for all our stakeholders and create a better world.”
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