Earnings Release Q3 FY 2023: Serious ramp-up challenges in the wind business overshadow excellent performance in conventional energy business

August 7, 2023
Munich

  • Siemens Energy’s results of the third quarter were impacted by charges at Siemens Gamesa. These relate mainly to quality issues of certain onshore platforms as well as increased product costs and ramp-up challenges in the offshore business.
  • Siemens Energy continues to benefit from a favorable market environment. Orders of €14.9bn reflect 54.2% growth on a comparable basis (excluding currency translation and portfolio effects), primarily driven by large orders at Siemens Gamesa and Grid Technologies (GT). The Book-to-bill ratio (ratio of orders to revenue) came in at 1.98 and led the order backlog to a new record of €109.0bn.
  • Revenue increased by 8.0% on a comparable basis to €7.5bn.
  • Profit before Special items of Siemens Energy was negative with €2,048m (Q3 FY 2022: negative €222m) driven by above mentioned charges at Siemens Gamesa totaling €2.2bn. Profit before Special items at Gas Services (GS), GT, and Transformation of Industry (TI) sharply increased compared to the prior-year quarter, driven by continued strong operational performance.
  • Special items declined to negative €41m (Q3 FY 2022: negative €259m) as the prior-year quarter was heavily burdened by Russia-related charges. Profit for Siemens Energy was negative with €2,089m (Q3 FY 2022: negative €481m).
  • Siemens Energy reported a Net loss of €2,931m (Q3 FY 2022: Net loss €564m), including negative tax effects from valuation allowances on deferred tax assets in connection with the charges at Siemens Gamesa. Corresponding basic earnings per share (EPS) were negative €3.42 (Q3 FY 2022: negative €0.58).
  • Free cash flow pre tax improved to positive €27m from negative €25m in the prior-year quarter.
  • In light of the developments at Siemens Gamesa, management adjusts the outlook for Siemens Energy. Due to the aforementioned challenges at Siemens Gamesa, management now expects for Siemens Energy Group comparable revenue growth to be in a range of 9% to 11%, a Profit margin before Special items between negative 10% and negative 8% and a Net loss of around €4.5bn. Free cash flow pre tax now is expected up to a negative low triple-digit million € amount. Management maintains its revenue and Profit margin assumptions for the segments GS, GT, and TI.

Our third-quarter results demonstrate the challenges in turning around Siemens Gamesa. The strong performance of our other business areas gives me confidence in our company’s ability to put businesses back on a strong footing.

Christian Bruch

President and CEO of Siemens Energy AG

Please read the complete Earnings Release:

Earnings Release Q3 FY 2023: Serious ramp-up challenges in the wind business overshadow excellent performance in conventional energy business
PDF (545 KB)

Outlook

Overall assumptions for the segments GS, GT, and TI for fiscal year 2023 remain unchanged as follows:

  • GS plans to achieve a comparable revenue growth (excluding currency translation and portfolio effects) of 10% to 12% and a Profit margin before Special items between 9% and 11%.
  • GT plans to achieve a comparable revenue growth of 12% to 14% and a Profit margin before Special items between 6% and 8%.
  • TI plans to achieve a comparable revenue growth of 8% to 10% and a Profit margin before Special items between 3% and 5%.

Siemens Gamesa adjusts revenue and Profit assumptions for fiscal year 2023 and now assumes comparable revenue growth of negative 3% to 0% (previously positive 6% to positive 10%) and a negative Profit before Special items around €4.3bn. In addition to the aforementioned charges, the assumptions for Siemens Gamesa reflect lower profit contributions from the execution of its current order backlog mainly related to increased product costs and continued ramp-up challenges in the offshore activities.

Accordingly, the fiscal year 2023 outlook for Siemens Energy had to be adjusted. We now expect for Siemens Energy comparable revenue growth to be in a range of 9% to 11% (previously 10% to 12%) and a Profit margin before Special items between negative 10% and negative 8% (previously around the low end of the guidance range of positive 1% to positive 3%). Net loss of Siemens Energy Group now is expected to be around €4.5bn (previously expected to exceed prior fiscal year’s level of €712m by up to a low-triple-digit million € amount). We now expect a Free cash flow pre tax for fiscal year 2023 up to a negative low triple-digit million € amount (previously positive up to a low triple-digit million € amount).

The outlook for Siemens Energy assumes no major negative financial impacts from COVID-19 or other pandemic related events, no further deterioration in the supply chain and raw material cost environment, and excludes charges related to legal and regulatory matters.

Notes and forward-looking statements

This document contains statements related to our future business and financial performance, and future events or developments involving Siemens Energy that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. We may also make forward-looking statements in other reports, prospectuses, in presentations, in material delivered to shareholders, and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens Energy´s management, of which many are beyond Siemens Energy´s control. These are subject to a number of risks, uncertainties, and other factors, including, but not limited to, those described in disclosures, in particular in the chapter “Report on expected developments and associated material opportunities and risks” in the Annual Report. Should one or more of these risks or uncertainties materialize, should acts of force majeure, such as pandemics, occur, or should underlying expectations including future events occur at a later date or not at all, or should assumptions not be met, Siemens Energy´s actual results, performance, or achievements may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens Energy neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. This document includes supplemental financial measures – that are not clearly defined in the applicable financial reporting framework – and that are or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens Energy´s net assets and financial position or results of operations as presented in accordance with the applicable financial reporting framework in its consolidated financial statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

Siemens Energy is one of the world’s leading energy technology companies. The company works with its customers and partners on energy systems for the future, thus supporting the transition to a more sustainable world. With its portfolio of products, solutions and services, Siemens Energy covers almost the entire energy value chain – from power generation and transmission to storage. The portfolio includes conventional and renewable energy technology, such as gas and steam turbines, hybrid power plants operated with hydrogen, and power generators and transformers. A majority stake in the wind power subsidiary Siemens Gamesa Renewable Energy (SGRE) makes Siemens Energy a global market leader for renewable energies. An estimated one-sixth of the electricity generated worldwide is based on technologies from Siemens Energy. Siemens Energy employs around 93,000 people worldwide in more than 90 countries and generated revenue of €29 billion in fiscal year 2022. www.siemens-energy.com.