Turbine maker Siemens Gamesa shares plummet on delayed margin goals
By Andrés González and Clara-Laeila Laudette
MADRID (Reuters) – Siemens Gamesa <SGREN.MC> delayed its 2020 guidance by two years on Tuesday, sending its shares close to their lowest level this year and wiping almost 1 billion euros (£864 million) off the wind turbine company’s market value.
The German-Spanish manufacturer is grappling with lower onshore and offshore prices for its turbines amid global trade tensions and uncertainty over Britain’s departure from the European Union. It has also faced pressure from project delays.
The firm had forecast achieving a core earnings margin of 8% to 10% in 2020, but said on Tuesday its earnings before interest and taxes (EBIT) margin would not achieve that level until 2022 and it was expected to be 5.5% to 7% next year.
CEO Markus Tacke forecast that Siemens Gamesa’s EBIT margin in 2020 would land in the middle of the range.
The company’s shares, which fell as much as 13% in early business, recovered some ground to trade 9% lower.
To achieve its goals, the company said it would implement a plan to save 600 million euros, which would include laying off 600 staff over two years, in addition to previously announced job cuts.
In September, the company said it would release 600 employees in Denmark, joining its main competitor Vestas <VWS.CO> in restructuring efforts.
The company met its 2019 guidelines, posting a 12.1% rise in sales for the full year. It also achieved a 7.1% earnings before interest and tax (EBIT) margin, although this was at the lower end of the 7% to 8.5% guidance.
Siemens Gamesa, which bought Senvion assets expecting these would increase its EBIT by 50 million euros starting in 2022, also announced it would consider further acquisition opportunities.
“These are not easy times, but I take huge encouragement in the resilience and commitment of the people we have in the face of these challenges,” Tacke said in a letter to employees, seen by Reuters.
Turbine makers are being squeezed by competitive auction systems for wind farms that favour the lowest bidder, wrenching the industry away from a long-standing system of generous fixed tariffs.
(Editing by Kirsten Donovan and Edmund Blair)