Siemens Gamesa cuts 2020 forecast and delays margin guidance by two years

Credit: REUTERS/Vincent West

Wind energy company Siemens Gamesa cut 2020 guidance on Tuesday and postponed profitability goals by two years as it grapples with lower onshore and offshore energy prices amid global trade tensions and Brexit uncertainty.

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MADRID, Nov 5 (Reuters) - Wind energy company Siemens Gamesa SGREN.MC cut 2020 guidance on Tuesday and postponed profitability goals by two years as it grapples with lower onshore and offshore energy prices amid global trade tensions and Brexit uncertainty.

The German-Spanish company just reached its guidance for 2019, posting a 12.1% rise in sales for the full year and a 7.1% earnings before interest and tax (EBIT) margin, the lower end of 7% to 8.5% guidance.

Its shares slid 13% in early trading.

Trade tariffs brandished by the United States and China, Britain's exit from the European Union, a global economic slowdown and volatility in emerging markets have all clouded the outlook for the company.

"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," CEO Markus Tacke said in a letter to the company's employees seen by Reuters.

The company said it would delay its 2020 profitability target of an 8% to 10% margin until 2022, with an expectation of 5.5% to 7% next year.

"We expect a negative share price reaction on the weaker than expected guidance for full-year 2020 (FY20); the mid-point of guidance would imply mid-teen cuts to consensus FY20 estimates," said UBS in an analyst note.

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.

After announcing last month it would lay off 600 staff in Denmark, Siemens Gamesa said Tuesday it would reduce its workforce by another 600 in the next two years.

In his letter to employees, Tacke said the cuts would be spread across the world, primarily in "white collar" roles in the company's onshore business and its corporate support functions.

Siemens Gamesa plans to reduce costs by 600 million euros in 2020 and successfully integrate Senvion assets to increase its EBIT in 50 million euros in 2022.

(Reporting by Andres Gonzalez, Editing by Ashifa Kassam, Clarence Fernandez, Kirsten Donovan)

((andres.gonzalez@thomsonreuters.com; 0034 647 69 49 89; Reuters Messaging: andres.gonzalez.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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