GCTAF - Earnings call transcript Q3 2021 | Siemens Gamesa Renewable Energy

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Cristina Perea Sáenz de Buruaga

Good morning, ladies and gentlemen, and thank you for joining our Q3 '21 results presentation.

Before we start, I would like to draw your attention to our forward-looking statement in Page 2. And with this, let me hand over to our CEO, Andreas Nauen. Andreas?

Andreas Nauen

Okay. you the thank today. and morning, for call joining Good

on results presented third year CFO, as of Puente. As Gamesa we for already course, for we fiscal and, for full preliminary present fiscal XX. for by the usual Beatriz will 'XX that guidance you know, of Siemens updated joined the the our first the 'XX. results months Today, I'm the quarter year of period July also and X

an of will then your the with happy the you quarter of And for take provide year. third we, will We overview questions. to be results that course, of very

impact with As an impacted the first affected I materials higher-than-expected on ramp-up you Offshore detail, been by in the Siemens now costs of significant has while and the been year the the our the of market first we in X.X X.X and quarter had billion continues Page about would third QX. of versus know, key months in margin the months points raw in also Onshore of with will X.X% new platform. increase Nevertheless, explain of revenue its on start have our QX QX on Gamesa X plan, volatility 'XX. X results financial X that an EUR we EBIT in by for suggest performance. The turnaround X.X% the Service minus and price

increased Brazil. protect already to place the the onerous price ramp-up in back-to-back the by efforts costs, in also of from reducing actions X.X ramp-up impact of specifically our to the hedging we provisions also on material material As cost and suppliers, the volatility. in indexation and and led million. price different and EUR results We've XXX contracts we programs cost-out at material that have as was aiming explained already high for has We've nearly platform raw QX such coverage put preliminary price increases call, with increased raw impacted of hikes

is our is program well improve LEAP and helping also to progressing Our performance.

minus of revenue billion margin Our ramp-up pressure earlier. cost, an of Offshore normalization supply and impact XX-megawatt the mentioned have QX. Service in includes new on turbine Also, margin guidance to EUR EBIT our of the X% the XX.X the X% provision will on with

to well backlog order take coming are advantage Our XX the more in billion the auctions and 'XX a the profitability. in years sustainable with to we Capital positioned Offshore strong of also than XX XX gigawatts come. like address us help shows that would gigawatts under of banner few EUR of renewables that of momentum in to activities I On mentioned Market reach OneSGRE Page to I X, the Day will at

we or blade an company departments, from that We how more see cost ideas to called reduce onshore, than have blade cost. to come with in around reduce so with experts off we business XXX activity unit conventions, conventions can blade XXX from different and

organization Another Siemens simplification we with our quality a that is Gamesa activity sure harvest knowledge HSE make focus also the interfaces. a in and we to customer of clear on that have

ahead our project Denmark completed have commercial that On execution, of strong we Page signed We've levels. we installation Standard as & Vietnam. turbine country next-generation strengthening service first see for the -- see ever of other received and amongst well. can activity rating in XX-year Offshore, in orders as off. also, year. wind in It in schedule. in like things. you wind our of manufacturing we to continued examples the service rating turbine success projects of On of already in contracts for an in We've X, us India. shows the our that a X, digitalization XX turbine first continued we of excellent from to XXX. manufacturer, can also is we excellent policies on X and the regards we've in the this achievements perform deliver of nearshore for improvements announced last We've India, an at Poor's XXX-megawatt or different And important you execution significant of X.X-XXX any project pays Onshore next-generation score In in That in that tower We with like achieved. to also the signed Service, Flak that selection highest ESG projects, areas good had QX, Page blade with ESG also out Kriegers results that with our has

main in and in in already of QX. the the billion, of of EUR more we related has We which to XX backlog in above by to on Offshore, Sustainability can X Corporate maintained reached orders see that year QX agencies revenue to driver more its activity higher of the Offshore, rating in financial a intake we we now with the expect than X, order and S&P of small billion right is to this consolidates the Sustainalytics the look come. we the in percentile resulted you execution at XX% top in Assessment. more or are where order backlog, as The we backlog chart of of course, look a where third billion, where orders be the at also QX. QX commercial We of this said, growth X% Thanks guidance, have volatility as continue high prospects year-on-year, for coverage EMEA of order order markets a -- XXX% Page average. for this strong a expect order than can growth to quarter. standard region EUR get If very EUR side On have impacted ESG X.X but, market we see an regional with Offshore around backlog distribution, the more is I position the

to a this, results low Taiwan. latest platform and bigger X.X QX, of smaller see can others. strength you the during supply more to words Direct order we preferred would prices another Americas Drive that selling quarter. be I the higher the projects QX, will Onshore Siemens commercial X.X X,XXX-megawatt orders. and XXX to was to QX, was XX, Offshore XXX the Hai the another up another the leadership XX, But of with activity commodity over Siemens U.S., from despite in turbine ago, like On U.K. continue in X.X a than in recovery also commercial orders will A Europe total we for mentioned Page have the megawatts see Offshore XXX few the main the third now by QX for in total stepped we with all the schedule. impact Page a early contribution almost that by profitability offset which than ourselves the we billion, megawatts effect, intake. On Offshore, market. our group Long of continues and moderate volume variations X.X ahead in intake. pipeline also XXX in X-megawatt the average of say than we for to the for in about account a project, negative scopes Japan And QX than to XX-megawatt thanks of year. the X see APAC current intake price. The project activity which Long gigawatts accounts agreements turbine, And the nearly turbines EUR a year and in also XX% in in consequence for in together the of already and be to larger half in the in and original this quarter. in focus X.X in backlog a and in prices with our trend drivers were in for in in platform XXX, of accounts project APAC for the gigawatts landed on Still, the and Hai intake signature Increase more and Gamesa XX-megawatt QX with program. XX -- decrease order In The are continues, maintained launch well country growth Service is more Sofia the order with gigawatts Onshore, measures to down The as Hai pipeline about but negative backlog EUR billion, can a in impact the impacted, order Philippines. positioned. with of the quarter. project, order in Still, gigawatts, presentation, X.XX the Asia, see from XX% mentioned the India, order X for the our business, X. since cost EMEA last XX, the same taken project previous specifically But X.X turbine. minimize as quarter B amongst Taiwan situation in will X,XXX with the megawatt, I the on had And Long also the total Page intake the X X.X% now order thanks to for COVID impact on in we a equipped its be the I stable the orders fourth you gigawatts. our the in and and Again, As platform on XXX-megawatt of regions the this Pricing we and assigned received Canada, currency the positive

high step the emission-reduction governments On We Service order short mitigating we've but energy have XX, the year look of those by nearly The the course, to the dynamics. economic year, central a seen previous Offshore of in the measures was, activity long in Page targets. order play role to the their have in entities up very at same term. announcing time, companies targets. key aimed we across comparison last growth over to the in globe volatility, can a the the in and affected In the a overall plays achieve role change market a a XX% also term rate market At continue retention plans QX to reflects orders. Renewable Offshore and also recovery and sustainable at strong climate related to intake QX. a nonprofit

for per and in XX% target in XX the also XXXX ago. a gigawatts goals. that decarbonization in targets would renewables for The IEA XXX by The targets shown to the targets its year also years. forward climate issued Fit The to countries stepped emission-reduction package a a reach months more target pulled And also nearly Offshore reduction stepped Europe, XX than by ago, Asia QX, target in XXXX by XX% XX% to the up emissions. their for with Germany XXXX increased to weeks up already versus the gigawatts reach XX% published XXXX already few XXXX in U.K. slide, And emission-reduction by this several and its to in X to U.S. nearly figure neutrality legislate XXXX X XXXX. for by that in first XXXX. in XXXX. also, scenario for scenario. wind increased and development country they Japan XX% to XXX installations is of XX% As updated gigawatts sustainable announced year XXXX

globally, and market. our ever-rising and overall, see we momentum continued in So

support good and XX, in XX-gigawatt expected long-term see market, and see prospects on this to example the auctions, translates Beatriz, beyond look wind a the the to would like for and are the are shown we can development have This Offshore for this you year of is closer auctions Europe, very this as industry. the on institutional can clear As hand into Page XX U.S. with which a of in the that, over positive financials. as industry, additional The to support the large Asia power that at slide. the And wind diversification time mid- I you, which projects

Beatriz Puente

months financial up that, summary is been and see, thank everyone, pre-announcement quarter versus has the for QX Also X up billion, as Onshore joining results first we of growth we our with year-on-year, morning, on group's Revenue Page July on X.X increase you the Good in and QX. third did that the quarter. quarter. Revenues X.X performance line billion On the Andreas. you, today. both Offshore XX, in are you with XX. Service, by have the third the XX% EUR picking EUR the with revenues XX% supported roughly, for last reached on Thank

on We slide. will go next detail more on

XX and of you amounted the we up from months third minus with of million, to integration Moving -- X to profitability, and X.X% months EUR year. quarter, with pre-PPA million. margin EUR and last of EBIT EBIT our announced, revenue. restructuring X EBIT compared costs EUR the have seen And XXX negative million the as XXX

the third Brazil, amounted months heavily been we by The This X the in that contract, quarter XXX as activities supply has worth certainly we impacted highlighting said, the mainly Service explained have million. profitability that the especially provision, continue perform for in also allocate a to prices. the and market compounded provision conditions. communication, by chain execution-related onerous seen have mainly we sharp to on and to mainly our despite material time ramp-up strong I situation bottlenecks as Both WTG we and reflects has also is the increase suffered experienced for have of related the X.X, that to that we Brazil, our It's higher shortfall been pre-release hit impacts in and and very That that the Brazil. Offshore here cost due backlog. profitability the pandemic our and X both we events in that EUR raw order longer

X-month XXX to the million, XX on quarter. period is XX%. the expense the impacted million million, first business and some tax XXX amount period EUR in net profitability, X we million X down is EUR geographical loss the year. capitalization amounted interest first the have of in operating to that in the million PPA not with proceed the losses million. QX from of year-to-date calculation EUR negative has XXX period, for EUR EUR the XX income amounted restructuring months loss the EUR Regarding EUR in The of XX X-month a after restructuring taxes, costs, the the costs, amounted of a any and quarter; gone the and and EUR and countries. EUR Despite X also also, mix Tax net million net both integration to Reported by down XX net in in XXX to to of million integration months of in and million; spend the amounted

XX basis. presentation position, I financial we group's closed I June, million X-month will EUR in that of the cash metrics. maintain debt it's the end the as of very period very It's EUR the last in to that a sheet to despite remains it flow have the highlight more on of key the financial equivalent and to level net beginning EUR we XXX and amounted XX% third the XXX increase to will the reported, at the total balance that roughly important debt quarter the Moving million. of period in revenue seen And as our the a because on CapEx leadership. of for year. to CapEx Offshore. And million. market position, for also, and XX% the net give opportunities has the negative a you And of months cover invested current effective later the saw, cover been XXX tap as important, the us, Working net market it we performance. us great growth will capital than

the Service the to Moving And of pickup in to Page Onshore important Offshore Growth I XX have on in At first the real; you EUR in X Indian also, U.S. as group less rates, X presentation, activities with to period. full and months, XX% group grown the the Brazilian have and due impacted also, dollar; the FX of will highlight the Service. were mentioned, revenue. supported the the impact other of the by constant and highlighted, by XX% the as and breakdown first the Russian we depreciation X-month of place months rupee of currency currencies period Most followed we by impact the year. ruble. billion. to as the X.X And took of in mainly revenue

left chart, group Moving can revenue by the see of to the hand we activity. the performance

X.X a billion, grew operations X% that year-on-year. European Service X-month of under by growth reached revenue service fleet the the in XX% with good Service including Service, performance was of acquired Senvion. year-on-year, maintenance the the starting EUR So integration up supported

the said was range QX, the During renewal the QX reached 'XX, on above Service roughly All, and QX as before, segment. strong very same X XX%, in rate I in performance that -- while XX%. rate

commissioned X Denmark on X.X during revenue Regarding roughly the the of WTG course, is will impact highlighted but fourth amounted see announced first In of main That in slowing profitability where reaching the to the we the driver increase we Offshore, of months turbine, in quarter, ramp-up strong the the also the of period. to down total XX% some activity quarter. Andreas the been has we XXX the revenue slowdown in month project to like manufacturing also, the previous of we in X%, have, and, billion course, of installed million. in -- due as -- very and of the will EUR X the of previous quarter-on-quarter QX, the also that the an we some quarter, it's growth year-on-year. I will on the division performance a nearly advance. Offshore one has mentioned, of third also have XX-XXX on in the that, projects quarter, as strong of highlight manufacturing EUR it And year-on-year as

we the and region and the Onshore impact to highlighted, the also becomes revenues as in the the in sales driver revenues pre the X The EUR strength by the highlighted, the EUR costs X% as the the grew Also also completely XX, performance sales that us. of numbers the the XXX the also explain side. less heavily we back-end-loaded that and of moving impact, difference and allocate that of with and period. the APAC XX back see, volume. the Page roughly you contribution of provision that impacted in -- the FX Offshore X.X months, Also, despite X.X% important request. growth, as of very the QX. to that activity Onshore profitability we -- end are Onshore, announced provisions July is QX, the of of good by quarter Moving of between onerous of customer billion. on revenues This In increasing the for EUR with largest that it's negative restructuring X.X X-month billion, also was on and our PPA That's the as we driven reached EBIT for with integration up year-on-year, the line segments Service million. is aligned

As also, single also resources projects. the that specific execution increase projects hit we or on this that those to also effect. And we cost these compounded related were also, the for to the on stays. concentrated, profitability that also and provisions the and of XX% have from I beyond provision ended, main the of onerous in performance profitability gains area, volume drivers onerous strong at explained, the in When annual risk Service quarter, margin. important on the in And taken for Andreas reinforcing of fast are as has we of Offshore will was the on course, the unit X.X, and that our sheet also every Offshore impact also the the highlight, foresee will has the productivity the of has evolution impact. that impact underlying the the and looking has of finalize mainly about mitigate affected increase have Brazil, of X to allocation highlighted, of strength see What the and for segment the and and Sales the ramp-up I the I plan platform steel as and materials, LEAP also the the in to highlight also especially actions, action the Service the of it requirement and margin provision If have balance quarter chain Also, have impact the mitigate and course, on We very of driven year the change on there business. it's QX. we look also Brazil also, the the also in been the a we issues is period. content shortfalls that course, the onerous the execution we front third positive and move we we for raw in copper. local the reason mainly fourth the on the period. that It's that that and and has supply to months important the by also faced thinking mentioned, Brazil ramp-up the that opportunities had will Service and guidance, higher be of that's around the implied of

XX we the position metric Moving debt net key last focusing net of year with period same on EUR June the XXX and, on future. million, for of will group. the to is of mainly an us, that Slide making a highlight versus that I and the the closed the the for CapEx debt increase effort the is course, group investing related to for which

on mainly mentioned, liabilities, of we on that the to that that therefore, million, also, capital XXX in consider compared by Also, taking to EUR 'XX, the Offshore. onerous the vessels. into CapEx period I working projects to impact 'XX leases year. impact are those it's that new provisions, order a of be are year, and is have has to all account, and, have lower the increased the cash XX% some related coming last allocated going the and is of payments that highlight, are are as to We which will increase highlighted important installed intake figures And lease As on the disclosed, also as the and QX. down in we lower affected the

as in also helped also, EUR also, also, optimize related financing of us, Adwen to provisions. And million EUR mainly the February, are have the the we the loan have gross that which increase fully explained, lease cost. you we debt period, of the in signed we And roughly liabilities. the what withdraw used in seen XXX million to increase on Finally, I has EIB XX

funding Slide that retained It's here add is Moving a very to the that thing only solid position. important. I will XX very the group

We also the in EUR long drawn roughly cash we sheet roughly of amount. have lines launched X.X and have X/X same have EUR billion, X.X in term, balance and nearly billion credit are we but the

billion maintain that maturity, X roughly until as EUR billion we X.X to of face in significant 'XX. liquidity. available maturities roughly and the don't I important available and long short So in is It's also EUR highlight, long-term available the that we that term, tenure any mentioned, of the liquidity is

So of questions with and I any very key that let strong now that very you the on balance for happy the a to growth highlighted, me sheet, market. answer now, tap have. then you. advantage to and Andreas And is as to might is, strong a pass Thank us, liquidity competitive a

Andreas Nauen

to coming that you, go years, we we Thank in if And wind and that the well are would potential from Yes. share believe energy strong Page Beatriz. XX, again the of steady to we positioned we with benefit growth. like to you market very

maintain guidance production price These impact as during driven the from the trend of the and of Nevertheless, even for U.S. we provisions can then ago, that of projects well-known the see, indicated been for half projects. presentation the total the elements number and will market pandemic, The these global will can mentioned supply with be has part. the Also, that trend during especially in and in And the faces 'XX if installations Brazil, the we for underlying the off XX impacted mainly affected and revenue will installations course, the go XXXX. we will reflects mentioned of installations. market, XX the As 'XX QX have, the the resume I earlier be. through our by year, look significant execution-related up XXX increased you procurement -- or the Chinese EBIT And really stable as where speed Beatriz onwards, by XXXX, increase will will a from there's, you XXXX, range And that XX. exacerbated profitability and X see XXXX, a Offshore growth Offshore of of growth it at that and the chain always of shortfalls very of excels. to Offshore the the course, the especially important Brazilian gigawatts expect of onerous decade. in will the by normalization impact also, and increases X.X, today company The increased XXXX peak on Service her preliminary Beatriz new material costs, been by and in by 'XX bottlenecks. also, the to weeks would the be by ramp-up projects. us. reach of course, for grow close like gigawatts and to and was estimates relatively the in and close costs we the gigawatts, to ramp-up a switchover Page for years markets. even still in raw where results of And second

guidance believe which the these again. our reach year for started positive expected We that Onshore lot minus highlighted I actions continuously for also about a necessary delivering and this programs LEAP range and beginning. with and a market cost-out new enhanced will results our performance have program, our your ago, in at including QX revenue the years. of profitability strategies to We're in I we and material is from necessary let compensate for that to also the now effect. prepare potential us questions. and aim of believe better we and the the of margin also end to prices, in taken As a achieve coming the and the efforts the benefit taken like steps get volatility Many year. low technical a new attention, confident additional also from also actions, And mechanisms and in for all would results to now features procurement raw protect of globally growth range X% as thanks between at is your result, next to year renewables the the ready we we've communicated the the fiscal take EBIT the to X%, be

Operator

Deutsche The Arsalan first comes question [Operator Instructions] from Obaidullah from Bank.

Arsalan Obaidullah

there Just the turbine any demand near in U.S. as the term? understand material seeing, and quickly, raw the of sort seeing you from I near negative uncertainties in regulatory whether just Are wanted costs term, of Onshore prices terms well to either of coming the you're from anything in the accordingly as rise turbines in

Andreas Nauen

at Thank we but in you of room, course, don't for it's is question that that this the And question. the see obvious moment. the

longer it a our Our fits because material, we negotiations order I we moment, to though of plans. all year and we prices, a that entry pass market And about industry the in we Since think see be. generally, down. Onshore doing ago, even but to that is is and there, course, don't raise expect on at exactly take little it slowing here raw as

I think all the like see market the also show don't analysts, that and experts Wood forecasts that. the Mackenzie, that we

Operator

question from Midha Vivek next comes The from Citi.

Vivek Midha

quantify pricing, So possible? QX. price commented maybe underlying Could on again, if like-for-like in you you you to I that, saw just that wanted increases ask,

Andreas Nauen

-- X is driven we we thanks, raising on keep effects. Vivek, What Yes, prices, by question. for the it and

reasonably, need for we because, that for compensate course, compensate that QX, cannot material of that to we it as raw we on effect we cannot explained First, in -- already, the that. pass

in question between targets. of So most X% I moment, we that think say, raised to assume range we is Onshore. And at the would X% your in I a prices, where in average

Vivek Midha

Got very enough margin? so And as -- be to it. to is maintain that gross that see enough you do benchmark helpful. That's see you clear, just

Andreas Nauen

time, but us increase. course, hand, of of introduce or the that hand volatility But the only that further not clauses raise the also prevent measure. goes contracts in prices, hits price any material on and that same at indexation raw top clauses We it’s it we the and in price

So it’s of a both. combination

Operator

The from JPMorgan. question next Gupta comes from Akash

Akash Gupta

Previously, your for If than indexation but X% to this driven I higher it start I booking is XX%. to ASP, mean, your indexation expecting with if are indicate I likely work year can minus be it pick I'm is X.XX in were And you could headline you number? EUR the by came how ASP to if wondering when X% a this comes follow-up on of flat. you margins in entering. this finish to just the been the second And sequentially, Offshore partly of does it group explain how order you all million, this to well clearly, on sales where guidance? in mechanism full X% you on have have then what the question Can and ASP you are realized range year. up

Andreas Nauen

Thank Akash. Yes. you,

clauses, by that many course, of are the is, line clearly regional factors, that turbine, current the in I material And and what they we do, distribution, translate we then very this to scope. raw said these the earlier, what and we influenced of pass into ASP let activities be all with through size think it I nature. and because First, goes ASP is so currently know in the complicated, different

one example, For steel of A into steel. pass-through goes tower. every is clause lot on tower

the sign the at have We contract when a point either when tower then or that in lock only order for we we starting steel. and we escalation, that

now March. And earlier ASP May, to we other have with material contract. yet raw It the even that in we depending when as we introduced all an said year this would moment increasing that translate different April, into contract. that did long we on. time. effects I that that on there a confirm already due of later, doesn't what now include the We But clearly into think Offshore saw we the prices there. the the So simply I that translate But pass ASP expect every started earlier, in it. project. that time it you I Nevertheless, in We we at and not since frame are an every already have methods, can since does in February,

I then question. Sorry. understand And you... fully Maybe, didn't your second if Beatriz,

Beatriz Puente

Yes. thank Yes, you.

your trigger throughout the down, despite year us. Regarding year. a the profitability the profitability that for number And have, strong and to QX, related Offshore to question, said, going change It’s will second I that we to said reasonable as understood the we it, sounds it’s the of if Offshore you on Offshore. for platform course, very of are

Operator

The question Bernstein. Deepa next from comes from Venkateswaran

Deepa Venkateswaran

wanted focus X.X. I question my the to on

to, X.X that think what example, I maybe where this for tell highlighted Because taken production, et been if are the Andreas, time you the contract. you milestones the And X of basically us is are achieving forward onerous can gigawatts we the look I So on gigawatt ramp-up? should mean, you serial has orders, what line. cetera? under

of for share the you the X.X health on some have visibility, can just So tangible details can your remaining so contract we was turnaround. if I some wondering

Andreas Nauen

ramp-up I track activities. X into start is would split to and I also the I'm happy with that ongoing. that like major maybe the technical to answer so. do

the weeks. installed few have operating the the next in will We and prototype start prototype,

final We the is the XXX prototype. step technical and of then this have that turbine. installed validating side of the XXX the And

confident we that's course, X.X. get wind so conditions, nevertheless, an how the see and the also milestone, the always that But We we expectations to size on goes. confirmed are, have It and of our on. prototype important will of of that depends

We've where we are these because go then on. details year. serial we contracts of X of are the very projects the the to with shipping or better this stage both for is is under where activities already series much of early one and most number we moment. these are call in in That despite ramp-up the later of effect the parallel currently prototype the the this the from. a activities serial And regards now the and into decided track, here, the at ramp-up we have markets. profit that X Brazilian impact into a for, of the ramp-up. separate control the ramp-up that first were have because it, then comes that European actually So machine factory, serial where of bill be extremely ones. we will all the go after looking technical the the have of not and signed had And with first machines it material production projects. the And of started the European at we is let's up, and producing readiness of the, start tracking close production, we one that we so readiness will sub-suppliers, Then that ramp let to That's you the at start asking And X.X separate version verification. that Scandinavia, we turbines

Brazilian the all -- that learnings one. from production can they the start-up, it So serial European into the translate

So are on in that the these going X are major that activities space.

Deepa Venkateswaran

I your Is -- it not you're interpret the started tested you've statement? get not in Scandinavia? If second how right, that prototype, already but ramp-up you I

Andreas Nauen

and When it's produce which to same the final in think you X.X technical operating machine, already nevertheless, schedule during activities regards ambitious you with and to general, But started will say preliminary I going first not have But also is yes, we that do the unusual I these soon. results, the on we completely have validation. therefore, at time, extremely correct, parallel. that time the highlighted the start prototype we ramp-up, an in the

Deepa Venkateswaran

Okay.

will suppose November on I us in you the where update on a are X.X. picture So give clearer

Andreas Nauen

Definitely, industrial be the because ramp-up on as will well we further on then the as technical.

Operator

question UBS. comes Supriya The from next Subramanian from

Supriya Subramanian

well, the have do for about implied I full if X%, math as in charges getting margin related that imply which fourth term being the X.X% little more in the booked your charges near on what's And further year, a the I quarter and bit quarter. fourth on would of negative on expect some guidance a it seems taken. we quick to in the

on, you backlog, let's if, revaluation the charges? not could further and the just say, the should the the what -- risks charges fourth wanted then are correct? of that that get beyond lead as being I into further revaluation your backlog the to XXXX So taken of one, complete is expect to any expect on thoughts sort exercise do we Or maybe the And well? of quarter,

Beatriz Puente

Thank you for your question.

before. performance Service impacting that both throughout are the quarter, preliminary very results, of profitability the X Despite really impacts that’s highlight really Also, our the I front-loaded are highlight the X fourth of the Offshore, year, QX. we strong the and there when and things. Regarding said impact the also that we announced of we

for the guidance. of we of also the foreseen course, raw also on the trigger the of materials impact throughout that in have have the volume Of course, but has onerous year, ‘XX just on QX, that we provision implied QX, impact the

today, market. provision based onerous additional in have volatility our me, considered we estimates on still the And ask is you provision? we’ll estimate As periods. of we of in sorry, course, run the the that of the covered have best If some onerous each –

are the our it’s that risks mitigate the with, our other quality risk the to as of and on for the be the strengthen coming processes, installed ‘XX and going course, highlighted, of execution role also to to years, said Regarding as strengthen we the we course, ‘XX. resources capabilities trades are, so, of

are the clauses, strengthened course, on mitigate volatility we being that the on materials. procurement Onshore of reason, raw inflation nature are there strategy to and as have and resources on with relating new some the the prototype, risks side, our processes, that’s of open. and highlighted, by indexation So the mainly risk And really that X.X also, we contracts

that strengthened We supply make to our we suppliers – of with back-to-back of have on kind sure also the the risk. mitigate, chain of course,

strengthen side procurement salespeople. course, to our So between the and, and – of commercial the link and also on

on are impact we try to further So that’s any what doing mitigate XXXX. to

Operator

from The next McLoughlin comes Sean question HSBC. from

Sean McLoughlin

move procurement. to wanted I into

an about procurement talking You're enhanced strategy.

differently? already of you doing a you've bit what detail also, procurement for just deliveries? And So your done little us give much you're XXXX how of could about

Beatriz Puente

that ahead Yes. have, prices The follow XX% of But year. is status long-term group of of that and supply is And is volume I'm general steel, we that [polymer] materials view our new the the will really we markets we of Andreas back-to-back substitute for the the we're multiple tower are risk concerned with mitigate ongoing price. will for increase commercial a steel some related strategic And to and that the in contract on we volatile Onshore maybe limit, the time, the looking we have. current roughly figures that start [financial] have to cooperation the included the covered volume. have. raw mainly that on to secured mainly the the has but already roughly in on materials also in sources, for the exploring increased is clauses, covered coverage, of as that we the course, seen it's course, have the Currently, alignment secure. on the course, agreements. trying due are The that mentioned, we not I XX% on saying side, volume current have the past also we we of said, the was XX% -- prices suppliers steel, roughly of is one, the tensions that that impact that have hedges close at over last have mean increasing ahead of of on high mitigation enter strategy main we are and have we -- peak the Also, I already to mainly trade to I same avoiding as copper. the with

steel to volume copper working key the secure with with mills are suppliers, then and the pricing done. is and We nearly our

agreements additional long-term front, logistics the the also Energy we monitoring to logistics analyzing -- suppliers, are we for another also have is of course, that of also our that capabilities. industry. suppliers closely very On with also, improve the and, Siemens challenge the partnership also hard course, on market, And working getting on leveraging with

combination measures the we ones risk are the in put place face all a sector. And so that that, to been course, as mitigate of has of that the

Sean McLoughlin

previously just said Beatriz, with of super that's less procurement an around helpful. that I you've think issue Offshore. ask Can Because I was Offshore?

indexation and say, think cost much let's But procurement how for increases? risks should about we Offshore 'XX scale of for Offshore. longer 'XX had, You've the for in given input

Beatriz Puente

course, of the no of really to try coverage. proceed Because is to the of steel trying in securing the again, with coverage. said, on the timing projects, to the already What volume we improve on to, we course, are from no notice As and, clauses that place. of because were to mitigate then nature clause steel those

where – whenever have of on steel project, well to strengthened cost back So coverage clauses, very the proposal that’s those for on double and group a in do we is Andreas where because, have profitability mechanism you to by the we has the avoid analyzed the Apart take of – projects the course, that as of been on from highlighted, stand, we if make for extra covered of can already new SBAs the terms into account ask or need no all is course, the there me, single do as that indexation copper always update we very we back. coverage you the to new the important. the analyze important sure project new that hedged prices, we stand been of as Also volume, mitigation. any that having, of

So all in place. is that now process in

to said, the we we have as company We mechanism analyze into will that the and, and the make sure others redacted I policies that back-to-back. the take those, if implied account half the profitability are strengthened the it’s within all because projects approve or because new we

the for back-to-back So the looking with are we client.

estimates of sure the side, are with all for looking cost information. on very, back-to-back And that run very supplier. the are making the the updated with We course,

Operator

from next The Rajesh Generale. from Singla Societe comes question

Rajesh Singla

is in realized which around your the correct, price Onshore calculations in business. are price quarter, the this my per If EUR is X.XX then So on megawatt average my million question price, order seems at in book -- megawatt million X.X your to which I low your if to business. around EUR as be with compare was per it level all-time compared Onshore

the I So big a between price? many why think price average there has your order it is book gap quarters. versus realized for happening been

on there? understanding, more like bit just So wanted have a to what's going

Andreas Nauen

question, Because a you calculations. little a question, main the even And of can your taking. follow was and activities that I have only Thank And is that are offerings we already provide always but raising average if just moment. course, to we tried to passing on answers the additional like on and as is add the you measures AEP time, various material additional on selling answer we so technical ways we I a we it in share also indicator increased what that influenced surely And your at admit prices what at stable. is what quite not or raised effects, in raw our do, of that answer, earlier my additional with that we're, the doesn't for exactly clearly hard many simply factors, same exactly projects. also value by working indicator, price number current that to hopefully but measures, explain even though it

Rajesh Singla

was the on average bit. but average little realized realized price, my A the sales. price on not price, when order Basically, the on average question book you

Your line. basically sales the by what the revenue you quarter, in revenue during megawatt, sold

the big -- the is in gap book price price. price there that So realized very order and a

Andreas Nauen

one now best -- you, again, We installing. Yes. a projects number at have look influence currently that no moment, That that but X these this. with are it of explanation still are bet into Indian also, chance megawatts projects up a -- better deeper. that a right mix I'm having sure the of to have it can without the explanation the we I come we because realizing Clearly, I it's the don't is at I will

Rajesh Singla

can look Sure. I can at -- I the will send you an so e-mail, And... call. maybe it you a have after

Andreas Nauen

happy that support I really to to, course, sure we Cristina and also make that you answer respond. question think -- of asked. will the

I do that immediately. can't And sorry that

Rajesh Singla

Brazilian Sure. problem. be on Sure, would another project. And no the question

booked for provision projects. very these have So you a large

into So can projects margin of going what 'XX? from XXXX, kind expect we these

Beatriz Puente

calculation that's And is, QX. provision for have provision profitability as the why we the of we of run follow we course, that reason XX, of those IAS The have in is allocated on spreads.

projects installed answer loss-making. the That's as as said, reason are of 'XX we and that onerous projects we aim, estimates of the your question, just to on are our as be have 'XX, course, today. provision those with the Of so going to those

to important have for the those and or 'XX we the 'XX the of they team is As are risk we books, those us hard looking provision, the projects all taken installed in be opportunities onerous standing risk to in for said working that so, of coming those what today, But have margin. to our on mitigate the mitigate also projects stand as risks. is we actions the X% as per and spreads for with those at of

Rajesh Singla

X%, okay.

Operator

Freshney Mark next from The Crédit from question Suisse. comes

Mark Freshney

X questions. have I

comment the X%. in on the issue with at without to G would X.X, the ago without that the of one weeks be you X% X bottom guidance QX, the provision, Firstly, margin the you the made of call clarify range, the old to

you next So the to there's imply call a out secondly, you to on Clearly, be as a couple Can being in charge plan pushed ago, Gamesa the G business low mean, would confirm in potentially of of at a previous the weeks get X-year to, that will regarding And on year. couple the out G that QX. new plan related to loss-making point? ago at alluded seem just a year would that profitability in be plan low that another question laid years. we clearly, why some QX? X-year X.X the Do I X.X the alluded Brazil,

Andreas Nauen

Yes, questions. Mark, thanks both for

in and, We repeat. simply call, last year changeover half in second be that we we Service I around would the the the had, by effects And Offshore charges. that Offshore QX let in a in First, that answer reduces QX, reduces other Offshore extensively also always, you question. to additional your we asking year the think, We were I always the see me in utilization Also, Service. try the that therefore, in we that whether results margin and normalization impacted think we number half cannot the first said mentioned like that did excellent already the of of quarter

said, second we of the whether is And we in currently, did with had not in apply. so charges, themselves that as knowledge have first onerous the do have the mechanism half. course, the we contracts loss repeat expect year the also that positive the we, effect calculation of to And and additional that all Beatriz that you half the

and into charges, to put hit in you everything have these they QX. therefore, You know that

around. the course, profitability impacted will expected is the achieve described plan, success to to in We that that ‘XX, other on present volatility to the the total whether means. But plan currently areas. is, already heavily now of Offshore. are of it’s we So both course, Service And year effects That now extensively. plan due to But see, of next plan. Siemens the in whether Gamesa delayed. the around. track effects, I it the turn to we highlight But ramp-up the of X-year QX and our all determined other of breakeven it’s in think by raw course, Then regards be and we is are and continue by to not turnaround And – Onshore currently with working to had long-term need X.X with X-year that I that remains, early we that’s we that new think plan. materials, we anymore turn on too we

We will, of will course, do have soon we one, we in as course. that due as

Operator

The Lafuente Alantra next from Fernando question comes from Equities.

Fernando Lafuente

for quick me, Two please. ones

when so nature ramp-up increasing a was costs, The ramp-ups? wanted of next understand, that already the second the them the to What one, the deviations? both sure modify the closed how could margin of extra for materials? these this it's -- cost cost of higher the cost of to a I X.X raw these year, was again, on to are -- or you the you of for -- first have question. sales and deviations not more qualitative I say just give proportion And if have are is the in wondering us question XXXX, that but XX.X. Beatriz, the number, what have I is that what you you been the no reflect

Beatriz Puente

Fernando. Thanks,

business, can us, revenues of of of very Regarding Service. roughly end on we on that by the important we next strengthen foresee stand year. the the for other rely Onshore, All of to coming XX-ish. XX% on the of backlog, year, that important, highlight roughly of will XX%, we strong done, very have as that of based Service, very and we we a I in, the say, because And nature very close a that's then to the course. next question, sales. nearly profitability we will strong the Offshore year sales of would and coverage have be of also, because coverage first coverage is course,

Fernando Lafuente

a sorry, And Beatriz, follow-up.

variations. impact there as is So the indexed raw impact these that are your on right, Onshore, Services, I that the it's have of potential the understand materials, they potential come from would of increase actually understand I from or in more Offshore, understand much And clauses no material? that for pretty the increase in this same. they comments I risk to

Beatriz Puente

the based, exposure Yes, the course, open let still – I on that we have. what of we of me course, mean estimates explain we’re – running how

right. is steel in fully But the tower. quite coverage would that, Your estimate backlog covered, that industry on to been And a say of Offshore, I course, what half that’s the has the of we standard no is, the impact on cover course, have.

to They clients very difficult related much steel of is are not to on business. other but trying That, the on material also impact. have all of the nature raw the are the course, back-to-back. We And tower, the mitigate of is – impacts. in working also, the the coverage with other to logistics course,

other working exposure. we that that mitigate on meant mechanisms I to why also that’s are So

of on that Onshore. And I action exposure that’s the an we’ve is But put linked exposure in the of reason be, for is the very we’ll plan that also to that the reason all of more business. open So course, the much Offshore, said, because the place. there

Operator

next The question Citi. from Vivek comes Midha from

Vivek Midha

absolute QX? based got you taking year, see to you the particularly to EBIT But early I going next you're developing Onshore this comments know relative us the give it's you year, level the what given on year this guidance. in in any out haven't as how into provisions XXXX seeing of could year, you

Andreas Nauen

on an I the be and like in discussed a profitability now SGRE. need on ramp-up is plans. and as And expected committed Onshore we question. numerous to progress integral we business We make next profitable, course, materials, we in year part around that will that ‘XX. of light many working comment the Onshore the believe would separate of raw the made times. are to will Onshore and – as we also for for convinced that We, of all Onshore said we turn But in areas. Vivek, of effects many you, not delayed, we impact that the that and That Thank I

program Onshore. course, otherwise, that gains, committed on unfortunately now Of LEAP to that. with severe continue this we I to But setback. that other stress on we huge is the the productivity quarter a the also stay But hand, work compensated effects we saw. by

We margin also business our stay vision to of committed the of target long-term with a X% to XX%.

I have we and believe that. we actions, setback. on actions, so committed hand, industry-wide many have But stay other that taken we overall, including a So confirm the

Operator

The next from question from Growe Sebastian Commerzbank. comes

Sebastian Growe

the bit be honest, X It's heard quarter onerous more view. still puzzled the To contracts. with and on we a higher-level overrun cost a everything very with that I'm

So have high are firm Scandinavia that really particular, And you the management in I the of a point overrun last too year, cost I'm as margins. changing in this to obviously. from Onshore in we interested result accepting the what and rather would seen which be risk apparently regard risk. thin came stressing with We're

onerous these are we contract provisions. Now seeing

the what use, EUR revenues, ambitious EUR seems pre-release. of top, thin similar call the And XXX again schedule cause stated root overall, you on XXX same. the yourself to the that's sort ramp-up EUR the XXX overrun. around and so million It's of an cost million, million be eventually think I margins, on comes about

risks really any and a So management, I'm are of the business. place the hasn't there XXXX that related after management proper really Onshore mid eventual prior while took been end the those under understand that to changed puzzled project that review quite that the I quotations frankly

barely that's that. So and acceptable, on leave I'm your really thoughts to there, And honest. it to hear curious be I'll

Andreas Nauen

Sebastian, reaction. Yes. And question. Thank course, your of for you, the I understand

projects. On but more are in I highlight on like careful clearly, to we much taking the would -- nevertheless, that

hit not same then catch price do development at fast for in complex time. more extremely stringent we we think Of course, projects. In and have raw have you as combination reviewing Brazil, there: the are hit the argument, I have current my that of localization material Brazil, schedule indeed, And it's us the in to that. we have hikes liked came to would we the much but several counters that that effects the did the X.X structure that

various much also get each and On every the deeper more your into are and more are as we and in and additional this and about got we Onshore ways. projects. in are I much much hand, I question, the sure careful, also I will more time, not all risk actions why last order going contract. I'm is careful this other higher? And Because taking and -- currently well, the time well, much come margin hikes price entry talked always we

also do lot. I time, we think I So that this expect over off. pays a And

Sebastian Growe

[eagerness] really just quick an are how business? so. run or the follow-up you're the can know, leaving seems think rather, rate. gigawatts So a Wood from one, should about X-gigawatt shrinking I to aside, structurally it I this about Onshore currently to And all we obviously, coming Mackenzie X business but the ask As don't you

return we growth So is to of sort what and kind there, the to sheet can comfort clean of that level in a sort eventually of have then from business?

Andreas Nauen

Day. like We we already beforehand stabilization further we continue Yes. from the years. flat that that volume unfortunately, we would what confirms for not market said last is with the the quarter what We the need ourselves first we did that last have of that relatively out But Capital a point few Market the year situation. in activities ourselves And next of or to or Onshore are the business. needed. stabilize that view And stable to scale

country think, new take a We also, like We turbines. there. I severe completely have where we our business We India a model ramp-down. the introduced changed

X And a Onshore be progress needs X, but after volumes ramp-up for also expected that we're the we also areas So complete needs number once the to of fully gigawatts making year, continue per said, to is along then 'XX. ready stabilize turnaround, we you the think business. and also cover of that to that, Onshore expect simply that the in I

Sebastian Growe

are they I to obviously. Okay. obviously up, and really other tough the It's a catching are think. competitors on track, Obviously, fast be going one,

that So as don't see the at the end question can after. but at then to try same see wise come it's very to point, what the time, extent I just for rightsize of I of the and hope environment that's the the best dynamic. case the day, to the

Andreas Nauen

just it's I plan. But clearly doing And Yes. are first, the more than we hope hoping. not

the We and described. goes it plans the exactly place, have along various in we structure that

I be to strengthened on have We contracts even which taking again. more think, careful in we,

see we we complexity. said. the major we reduced and we our stabilize impact, X.X. to our X.X Onshore be this will exactly have after We've The contributor, reorganized Now as

with We that. are progressing

a are scale the ramp-up. adjusting scale also ready to smaller be for We our to

more them hope. I But than we think plans as see of we ago, of full a it's to they, these to about started year fruition. come follow and all need we that course,

Cristina Perea Sáenz de Buruaga

Andreas. you, everybody. Thank you, Thank

this, to call. are with conclude we the think going I

Beatriz Puente

call. very questions you And happy course, that the to you Thank of have. Thank you, for up may any attending much with follow everyone.

Siemens Gamesa Renewable Energy (GCTAY) 31 Jul 212021 Q3 Earnings call transcript