In the first quarter of the financial year 2022, performance was negatively impacted by supply chain related disruptions, which are now expected to last longer than previously anticipated, further affected by the continued impact of the COVID-19 pandemic.
These supply chain tensions have resulted in higher than expected cost inflation, mainly affecting its Wind Turbine (WTG) segment. Also, volatile market conditions have impacted some of its customers’ investment decisions and, as a consequence, resulted in delays to some of our projects.
Additionally, the ramp-up challenges of its Siemens Gamesa 5.X platform, including some necessary design changes, have affected its production and project execution schedule. The negative impact of these delays and changes in production plans has been exacerbated by the existing bottlenecks in the supply chain. The consideration of these higher costs and the update of the assumptions for market and production conditions in the evaluation of the total WTG Onshore order backlog, has led to a negative EBIT impact in the amount of €289 million in the first quarter of financial year 2022, mainly due to cost estimate deviations in onerous contracts.
WTG Offshore contribution remained positive, and Service delivered more than 20% profitability (EBIT pre PPA and I&R costs) in the quarter, despite supply chain disruptions, and its negative impact on our operations. As a result, preliminary earnings of the first quarter of financial year 2022 are as follows:
- Revenue of €1.8 billion.
- EBIT pre PPA and I&R costs of -€309 million.
- Net financial debt of -€1.1 billion. Available facilities of €3.2 billion (out of which, €2.0 billion maturing in financial year 2027).
- Order intake of €2.5 billion including the Offshore contract for the Gode Wind farm in Germany. Total order backlog amounted to €33.6 billion at the end of the quarter.
Based on the first quarter performance and the outlook for the remainder of the year, SGRE is adjusting its guidance for financial year 2022 as follows:
- Group comparable revenue growth in financial year 2022 versus financial year 2021 is expected to range between -9% and -2% (previously revenue decline between -7% and -2%).
- Group EBIT margin pre PPA and I&R costs is expected to range between -4.0% and +1.0% (previously between +1% and +4%).
Despite the complex near-term environment, SGRE maintains its long-term vision for the business aiming for an EBIT margin pre PPA and I&R costs of +8% to +10%.
