GCTAF - Earnings call transcript Q4 2021 | Siemens Gamesa Renewable Energy

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Andreas Nauen

Good afternoon. Thank you for joining the call today at this somehow inconvenient time, which is due to a Board meeting held earlier today. We appreciate your dialing in and we will endeavor not to delay your weekend plans too much. I’m joined as always by our CFO, Beatriz Puente.

We will provide you with an overview of our full results for fiscal year 2021 and our guidance for fiscal year ‘22 and beyond.

happy your be then will to questions. take We commodity complex the expected the effects Year increases shortages XX COVID-XX second with a was in sharp year. and than Fiscal half of of especially one lasting certain components transportation the prices, costs, of in with longer

points at year this XXXX. So let’s for look the key financial

‘XX an the the to for clearly announced X.X%, both chain, and in offshore strong of service. X.X the EBIT an margin in Gamesa guidance Fiscal already beyond. year. facts. First full of execution, Point the impacted Siemens and saw action the two, our line the and Revenue supply ramp deliver low higher our ‘XX with QX year with in were of of we taken of July challenging XX.XXX extremely the billion that results the but end in for we ‘XX cost conditions by both turbine results all up to continued

in put to like chain and included place actions have We supply in recovery of these drive all LEAP tackle challenges program. the the the different

consolidating are capacity final reaching restructuring progress of India, in are We also good extremely EMEA. stages and making in the our

added of chain put of auctions in Glasgow. you backlog measures can also [Technical than different momentum in especially will XX days, gigawatts We have billion and as you and at during benefit if pressure. growth, Only in on be as place regarding the chain And more in in that insist these and are ‘XX. would ‘XX also COPXX challenges look actions Siemens there from more enhance development to seeing, between we in than like financial on well-positioned in three XX% supply reaching And our between from order turbine. the currently are we’ve I and strong guidance practices minus In procurement specific cost-out X% challenges, X% see, cost-out launched today, revenue we from likely to X%, order programs impact coming in it our offshore, ‘XX capacity ‘XX to but XX me I growth to pricing ‘XX the an Difficulty] achieve the good. Gamesa inflation X% despite supply to and beyond. have address the will year renewable, the And X.X ‘XX. in more longer ‘XX, on we and an results our long-term current fiscal guidance a XX in fiscal message year vision, expect dynamics for our in section EBIT key and to long-term under short-term circumstances the guidance our intake explain take Whereas to will year rate, for our of fiscal X% our minus vision originally the detail, year short-term is the of outlook presentation. margin brings and maintain billion expected. prospects than we that the are to cost

rating some that increase which Now, of our turbine and recently megawatt, the of good largest We execution go strong the I means in examples technology. will X.X announced through X.X industry. turbine to the our quickly it’s

fiscal offshore our by offshore execution close the Siemens that I of of fleet drive availability year turbines is the more perfect say, for XX% We direct than in XX than have ‘XX maintained more would also, our installation and gigawatts direct to in Gamesa. drive

revenue. project a it out ‘XX management making supplier with outstanding main agencies. rolling has It working actions. improved restructuring seen organization, supported completion program year blades measures ‘XX near since very cost-out in a also Vagos offshore terms EMEA the top the LEAP by successful boosted quality of the by sorry XX% innovation capital our measures launched was driven has the by performance. XXXX. It onshore Indian to ESG onshore since among launched productivity, different progress simplified excellence was and by of demand, book introduction a has ‘XX in turbine, like management. ratings operation has also lead in our plant of by Fiscal and X.X-XXX a with gain also -- sector in seen improving onshore management year standard it and has factory has ESG of the Fiscal our the achieved not been Our capacity for that other LEAP our positive newest global of asset in in the and minus productivity platforms. We’ve is

the in to And with Poor’s percentiles of in and ratings Russell top ISS, we’ve different in case also first in a are in Eiris. continue work of reached score XXX XX high & almost very leader. we Global, second ESG global become the We sustainability Standard a and FTSE Vigeo to

or the neutral carbon powered from of recyclable sources. first like launch We blade, already ambitious renewable have the targets being XXX% achieved being

We and in wind XXXX other women have completely actions. leadership zero targets emissions, turbine XX% suppliers, recyclable our by like positions set recently a net new for among including XXXX

impact an commercial the with EMEA Brazil, and the Gamesa the In X.X year, last by stable our of profitability in chart focused accounting company’s year a look Let ‘XX, X% the of higher the the performance Sweden, and of intake second year. fiscal orders XX% year, on of more drivers strategy Order than to offshore. last right of in the intake in at take strong more points billion Canada percentage Siemens this of More the XX% over increases India half intake commercial activity sales in The this or intake the a in with of X.X US, on with low billion due Siemens the activity from commercial The we commercial XX was execution volume and We maintain remain and with selective to high year. negatively prioritizing main where us profits guidance. on of year-on-year quarter backlog X.X the of a than fourth slowdown price XX% megawatt order or year-on-year. focus with and have of total a in XX onshore in detailed a reflection of year projects. Order now high the taller account XX.X of backlog to Gamesa markets and risk the of Pricing continues order lower currency service platform X.X of the and the controlling the QX growth drive represented to and regional the mix, nearly a be of scope fiscal impacted billion, for in XX% is onshore, of ratings. being backlog QX for the impacted towers, Thanks with activity to revenue came X order ‘XX. projects Turbines was continues fiscal [Technical coverage order contributors region impasse and Difficulty] average. a year and fiscal billion ‘XX EMEA larger ASP by strong Americas smaller the and increase growth effect from the in X.X that related prospects with largest above US the increases. in activity the Spain. order our more is The than shows of all positive volume dilution gigawatts. QX. volume. seen the the by order greater order

India. the seen of progress cannot be large impacted to This QX. nearly continue XX% of on contribution Although front. prices by were In the increases seen impact be this we price can in from ASP, in QX, the make

Long are passing a very share we our of maintained Indian not backlog to our which X in QX through is Excluding this inflation have ‘XX in fiscal million ASP but nearly leadership X.XX our contracts, the implementing pipeline, diversified preferred we increased ASP Order fiscal higher this another say increase and fiscal new we’re The excluding Siemens ASP, you in XX-XXX slightly This also landed intake X, price our XX% X.X agreements ‘XX year of offshore, XX-XXX to than lower ‘XX. per than ‘XX, progressively. for is Hai X.X our year that XXX SG now India. map. gigawatts as megawatt, would latest a clearly gigawatts in megawatts supplier and a Gamesa both megawatts equipped in and intake accounts for turbine. Long gigawatts. X.X we double-digit Taiwan, pipeline all with B can Hai total order gigawatts XXX in In is two order in the year in on in with the But see in

consolidating contribution in X% year gigawatts orders. that ‘XX, fiscal of to EMEA as increase at with half activity ‘XX you group with to a year offshore billion, under with to technology of third-party service But X.X comparison year-on-year to, technology. partner the the impacted by MOU intake And the nearly surely on of a XX% X Almost today signed backlog with look United over in maintenance a QX China. the accounts to now had X.X to East total license you almost XX, seen service, new intake its Power I growth ‘XX. ONE a position, have significant With which well, gigawatts Beatriz that, extension closer a Anglia we’ve As the the years an to will XX order at give with offshore of XX financials. of new An XX billion, time, for in order a the lastly higher billion. of strong from related hand end ago, large leading than fiscal year XX at nearly around also in

Beatriz Puente

thank the and group today. year our Thank performance and financial you, Good cover ‘XX. will Andreas. presentation fourth results you key during the joining of also afternoon fiscal the for I quarter

these low-end company the end all at restructuring the negative our measures XX that the of of million say, also the profitability equivalent also of XXX we constraints year, year, dollar, in management, service, and X% amounted year supply negative growth the compounded, X.X% address the on cost year-on-year, X.X execution to logistics a the been the second before. up has We the and due pre the are revenues on offshore logistic strong its current longer the years. in on rising that also of impacted higher company suffered and our US mentioned, has ignore said, the bear a the on cost. coming would and month ramp to quarter the million order revenues chain mainly has was mentioned project focus first year during materials the with raw came by provision results, costs and real first, of negative backlog improve time escalation revenues the the half has flat. has challenges months which and the in year, billion reflects during and I have cannot to EBIT, We’ll mainly environment, year. line, also currency, margin cost I onerous driven been to a Andreas ‘XX the Saying EBIT This also to line the inflation impact also the that delivery WTG challenging out deliver Fiscal I revenues a second negatively Indian Euros provision, also of of on the the commercial that, and and are pandemic the fourth million service the and both revenue to amounted chain extent the this situation. and the This been second the the that ‘XX year. supported the heavily Group has amount As current would and prices contracts commodity both by Euros, for the able cost July. performance Brazilian ‘XXX with year, on delays the page has of the market the of execution the ‘XX been impacted onshore during increase expected has by despite guidance the of highlighting to and that the perform say, quarter XX Euros, provided to challenging accrual group, worth I booked increase X.X risk activity the detail but half been lesser ‘XX. half during more during to market by to Integration of an year. by sales and to were strong already in during activities, of in cost amounted supply fourth of in on first fruit depreciation XXX guidance the Euros, nine it’s continue to of issues, In XXX billion half impacted the while as for second the the and a especially in of amounted very nine year of and go After quarter. Rupee. by Revenue conditions. with challenges million also half EBIT of in Euros the a the and a also QX expected to due Euros, we both margin on in integration for covered Euros the to year from XX the low of million been EBIT as group roughly XX.X of XX Euros million the million Euros, and the half last continued offshore in restructuring strong PPA, happened

that have planned planned less We -- during effort originally ‘XX. than but we continue the executed will

expense as to million and the will in of in quarter amounted the the the Our million to higher XX initiatives despite company the where to expense net the year group, place been tax negative the XX years different in million in year. a and Euros the expense losses markets were put the amount cost leverage interest has possible, in The that highlight the tax thanks net management deferred Euros of decline fourth capitalize couldn’t group that I X interest consequence assets. throughout of the

the in reported year a of Euros net and As of of group the result loss Euros loss of in a quarter. last that, million the million to XXX XXX amounted the income

increase product but to offshore growth, The and balance is stall the increasing a you with And important cover important, been and technology XX been in manufacturing development will and initiatives and which the Euros. XX% increase to working invested of XX.X in the on year, drivers, to and the the I revenues reached seen that of is now, at have share will the Offshore group from -- platform. of very well billion in the will revenues service, go the invested the emphasize in high thing an the to level installations. our of X% The the European reached level on of structural of quarter the Senvion group year XXX QX of and the on including with Service track, main Euros I I Euros, I presentation, megawatts of And and roughly the to FX, manufacturing we that grown Andreas high constant would Moving with new year, move Euros for maintain supported the proven growth the strict capital supported of equipment. X.X% Euros, CapEx, investments metrics, X.X% this If for of will of of offshore even will offshore on important highlight increase by our driver because asset more is revenue the XXX revenues capacity will revenues in and group. also service of roughly both more to X.X benchmark both in capacity the the of on sheet integration and that the has of was between XX% quarter, million potential achieving offshore XXX and the highlight tools has grew Operations invested by of XX roughly million achieved in also year, strong Euros. and as in capital page Euros. our market. benefit focus also to key year-on-year revenues I X% the the have strong acquired focus million the growth future of In X.X like CapEx billion If billion last billion very has XX% that levels. the XXX expected. the also as also of working [indiscernible] because year-on-year. that company fourth an of of both outlook, and To a year the performance leadership also growth say year-on-year, activity that out continue company has the that the finance group growth it we negative management programs X.X with flat control really and an and

an with and up year, The was smoothly will at and and the of the explained online of planned our also projects the we of megawatt been successfully As execution start next of estimates. manufacturing it been XX our ramp the the beginning megawatt completed has group has platform year. of XX introduction cost platform

market ramping it during meeting projects working Given the excellence. manufacturing deadlines more the strong Europe in and very up offshore execution eight a turbine, Asia of than the is conditions, and operational challenging the good we year delivery are and example new our in also of the with of

bottlenecks, also the than down the revenues year, capacity. fourth to revenues of -- also by X% in have has freight manufacturing Saying and from onshore been a quarter on Moving driven that, volumes the volume line, And year-on-year both supply component, chain deliveries the especially been increase lack on with and been a by the X increasing reached the cost, with X.X%. activity late reflected revenues and strongest also and the onshore, This impact installed billion market decrease Euros, X% of far onshore of increase. the specific top sales volumes. has

XX performance group. focus the the of page EBIT to Moving on and

we line in I with margin to before, EBIT year at low mentioned X.X%, the stand full market. that end the negative As provide the for

allocated the group Euros. ‘XX on impacted the XXX close has of partially amounted half, as has and been inventories our year measures, fourth therefore been impacts impact the also also to first by was the provision Again the covered Andreas during owners’ the nothing also quarter. lower and covered our of reassessment both provisions for by half that XX also before, the market Also the explained through LEAP the that release million but second As owners’ the Euros by efficiency to year, the was quarter on the inputs performance segment, fourth compensated availability failure rates provisions we have the on WTG of ordinary in warranty signed significant of program. of million

division, performance with deliver continues and the on margin XX.X% will strong a to QX full a On the I highlight roughly very for that service the of XX.X%. year,

but leverage the group flow to XX, Moving of of XXX want generation, the financial of a course, be to the Net slide I highlight of the also position top continues group. discipline on the that the amount of and debt negative strong is the control to cash group million priority leverage of at lease decrease will an of I debt is of Euros September, on and end investments, CapEx increase Euros. XXX the of the group, quarter, the course the the investments Euros more of than liabilities. the XXX increase to highlight on million fourth CapEx increase million net profitability significant related The

allowed in also cash of million The you in execution on compensated in I the amounted ‘XX, lease thanks ‘XX. XXX were end Euros, liabilities working the have also has of in signed withdrawal program our debt expensive million management replace full XXX of lease Euros loan Euros. the under has by capital as million more As asset been million strict increase the level roughly the slide with February a of for interest a reduced impact XXX been CapEx positive cash bilateral the gross to capital. to of strong of generated The million working The to also on Euros valuation September total flow the Investment the the the to group European has control us liabilities mentioned we that gross Bank see and XXX CapEx increase of of and by Euros in lines and operating cost. due XXX this company that

into Moving the group. cost remain emphasize I want for ‘XX, will that also priority to a

benchmark strict before, also of disposals. levels, and cover, very We working control you a has now and therefore also close with X.X billion maintains I will to billion of capital maturities graph, capital available -- solid last are explore no the happy also questions mentioned long to will of lines, roughly the And secured with levels, very significant important, for group least, also billion out not I at a the on a Euros as asset have with but if More Euros to the have group. Andreas we as continue of as that selective we maintaining which, cash. the position The term September the funding answer let me I’m in might hand the X.X in Euros very credit see is And end on of this, drawn slide, there over X the that important, billion has of this you X.X to been Euros. on outlook to liquidity it see cover face. you have. company the very the short-term liquidity Andreas group. any And

Andreas Nauen

can And slide, Beatriz. targets In slide and higher presentation, and conclusion as and see give let today’s to you last XX. guidance details you, an the ‘XX. our outlook we across the including seen in Thank year, of globe, more renewable that we’ve for the beyond guidance me

years. the clearly XXXX. the auctions see a increase globally, for boost X share European trillion renewables a in In for package programs wind significant annual Fit encouraging for With of the Union, with de-carbonization renewables in by the commitments energy recovery XX% the opportunity general, industry includes offshore coming and of the we market wind green XX total by target

XX by of XX XXXX, at an Germany, offshore target gigawatts XXXX. an is by Looking it having onshore of and gigawatts target

UK change and XX aims target. emissions somewhere climate give the most reduce offshore XXXX, to to in reductions emissions by XX% example, US around gigawatts by its XX% the world’s an at With XXXX. the country aims Another ambitious by

ambitious in commitment for Taiwan the show strong and planet and their offshore. all in wind the will wind energy This significantly the long Japan, While potential demand targets capacity, Korea, in term. especially Asia, increase around South strong will

slide bar to decade, XX% half doubling XXXX. of this second XX, in you see can and about a the the XX IA, gigawatts gigawatts challenges annual the than by number you level page the look by more by significant The of zero XXXX. the especially, zero XXXX But reach supply last grow net the annual by chart, dynamics, energy. at wind in potential installations need wind the if at current if are close normalization. to XXXX offshore But look XX of grow times short-term will regarding in with As low X.X chain the targets expected reaching net with we of to to installations by many this we see visibility

China. increase affected these trade The will surely the the and see, the the achieve the guidance between side, market changed said on back margin three. remains the consequence year of page, also and the prices between materials, ‘XX dynamics capacity but vision as for the freight that investment expecting are you on Fiscal on the by activity normal cost material inflationary As delays point raw key prices, trade supply impacted significant, steel, high to and maritime combined fiscal back ‘XX chain. as term supply customer very our supply The situation is and short and EBIT freight of the will will in of wind and is by on turbine year results market risks. minus a as year shutdowns guidance the freight disruptions decisions, fixed can constraints, have electricity increases disruptions of the an on the and last with cost manufacturing has go seen and lower tensions chain, X% X% to charts my in cost. a and lower having absorption These ‘XX previous been long-term change And the regulation, the over X% impact well copper The as prospects to tensions increase period the on you’ve XX, revenue. happen. but will impact minus don’t in in cost, good, current this great the market right they’re of fiscal have outlook raw chain and growth when X% revenue we in also exactly year know

we due volatility, costs, the On specifically, short-term wind LCoE be programs, sustainable X% in the profitable on profitability above More to Strengthened on program. has the portfolio, investments program CapEx new to to the growth ‘XX, material Beatriz market plan. side, measures This already we the our turbine, revenue X.X cost restructuring. will X% our and In positive prices investment challenges, that technical growth raw support all the savings a EBIT the will LEAP guidance to also mentioned. LEAP have ratio offshore and Despite and of from turnaround, transport features maintain is, on competitiveness mechanisms an turbines it from offshore, our revenue our and in around the XX%. said the long-term to to lead likely vision, our than at based or but as in will an service. to long-term reaching and and longer circumstances under years margin our ‘XX is take achievable earlier, especially Nevertheless, protect ‘XX current the this expected. vision I are aiming included onshore

We with and chain positive market supply this and on freight normalization and materials on raw ‘XX term achieve its will and also, number demand on mentioned, fiscal onshore our of And the on depend year cost. times progress a regulation that as expect a vision. progress long between to impact

finish and our long-term me through units quickly three Let vision. how by them going business the this three support of

to The lower right cost of product. multi-year in challenges installed tackle been power and LCoE. successfully programs also roadmap conditions, design. to and allow reached The and AEP It again inflation of onshore also numerous have X.X operations. have consolidate it can modular It facts, a key CapEx features I be a greater we that by tested has output including deliver a cost-our been of materials the And on impact will flexible an our optimized that higher two X.X offers optimized bill via nominal We’ve and and the introduction already. confirmed Gamesa and Siemens addressed, has those platform. megawatt Our of now competitive performance is confirm Denmark through prototypes Spain under program. cost-out launched various this to wind new to

the also project are pre-series whereas as in have to forces task development investment first supply speak execution. production, in of chain the are and the the the increased place we units in manage the Sweden and commercial We installed

from ‘XX. the for We are getting fiscal strong expected in year ready and also demand demand offshore increase

already XX in content in pipeline, benefit from new decade. sure also new To this gigawatts Havre, is our where the investing with We will to securing upgrading early are factories we we we finding low-cost we the France, and the the opened Le between our in XXX make next start this for volume supply and UK, footprint, US growth, year. and produce our in and extension Hull And opportunity like facilities in of local right products balance but in Virginia have backlog the gigawatts huge production.

market. turbine and XX-XXX to our And meters. us I’m boost also out with improvements risk leadership to turbine, with offshore. XXX reduced to in diameter We continuous in brings with me cost for products offshore XX the SG AEP this rotor convinced, power allow Megawatt will this direct are drive leading up investing and that consolidate time of And and the significant

machine the in think this Norfolk capacity preferred Gamesa. Siemens in with X.X supplier confidence Vattenfall of and I UK are proof clear gigawatts a is with the that in customer a of and We projects for

with profitable over We’re continue EBIT outperform also deliver to of that will the market growth and increase confident service an XX%. strong and

presence XX countries a to and a grow has service achieve backlog and synergies. around global great a potential growing in Our with

in service performance with, markets of started with as is the Gamesa. market for we in shown finish developing And other the for a Siemens decentralized very electrolyzer capabilities rate In see drive the expected address Energy maintained customers, team service can Our the an solution features production Siemens factor growth. in new direct more excellent great maximize as XX-XXX turbines renewal year integrating we direct by competitive, LEAP loss for of ‘XX. are all offering also and the good our can developing a puts into the X.X position than wind the X% restructuring and XX% the drive, with to And you have by the fiscal that enhanced are operations below the implementing. we program, I innovation, key area turbine. are benefit and to from actions I’ll we program this the

optimizing product profitability. also and to procurement are our cost-out upgrades, sales productivity we protect We coordinating and and through our

on We and also staff improvements. product out cost cost focus

the in Thanks. and and our growth your offshore all the With you attention globalization, to America, as on much I we through -- EMEA now of thank focus bottlenecks that, and explore and chain management, your finally, of we work explained APAC questions. are footprint course and Regarding offshore footprint. benchmark to asset quality disposals. hubs with to asset [ph] levels selective achieve operational we capital safety. also supply on working onshore And excellence to adapting continuous take for our very maintain ready and By health

Operator

Vivek [Operator Instructions] The Midha ahead. Citi. go comes Please from question first from

Vivek Midha

Thanks afternoon. on offshore very one around very onshore assumptions ask good question, fiscal sticking within the Thank question talk I you revenues you much Can around So versus guidance? much. the guidance? the to the revenue assumptions a year could embedded and within XXXX maybe

Beatriz Puente

Thank you for question. your

environment constraints on Offshore more revenues onshore what question, customers that service, delayed take I of growing decision within we is to expecting to have course, will the are take and regulation, that at segment imply state be Of place activity account by high-single guidance. be case are will your the on that because digit, guidance but in because cost. of challenging might chain course assumptions changes take we we decline the expected to challenges all stable. to to also our that foresee in on revenue continue revenue, the the that of logistic higher say And of on so the will supply the into

Vivek Midha

on do visibility Okay, to improve year? that you -- guess the with but limited you any expect is mean, in customer this understood. very that And in do I your expect conversations sentiment I customers, terms Thank of next you. then

Andreas Nauen

mean kindly could the you that? question issues? whether the I in onshore Sorry, of to didn’t sign you raw we fully, repeat orders get Sorry, despite material continue

Vivek Midha

I sorry, repeat. am I will

logistics we and concerned So, you in or increases how of causing very should much. of terms Thank think challenges are the going and impacting raw to start rather customer be material destruction? you that issues how demand the effects like, these that demand

Andreas Nauen

clauses, raw that what think in that customer case their or and see, have I also has of you believe out. business the general intake, my that and will can for and that customer escalation materials, on customers wind also by clearly in cases, even and I what an business demand the clauses, with older our the that that that see pass decisions. through course, in will demand pages, the overall longer, is of influence this effect negotiations take own some the is of there and Nevertheless, I highlighted we onshore because continue,

Beatriz Puente

question. Next

Operator

question De-Bray very from comes Please The Deutsche from ahead. you Instructions] Bank. [Operator Thank much. Gael next go

Gael De-Bray

excluding ramp the us first Good margin margin the try appreciate but question is would a ramp XX have in I question the what to afternoon, to margin the the here it’s of of XXXX bridge. idea the megawatt offshore? been up target. the about and pure understand theoretical My help better everybody. the know, Could turbine manufacturing is impact EBIT you

Beatriz Puente

expectations referring change and it fourth with to what line platform I of be in as As I the quarter, said, successfully we’re offshore, done [indiscernible] and margin. the our on on the the in said the impact was

the quarter million count can because of of impact change. million Euros XX fourth Euros, circa will XX You maybe that it. be on That

Gael De-Bray

said you Sorry, XX? XX,

Beatriz Puente

Yeah.

Gael De-Bray

in what assumption particular, of year’s the And of used to else us understand being be margins, you’ve terms cost right. impact next going guidance higher help is in Okay. steel the of for terms in could all steel on the in the you All equal?

Beatriz Puente

the our strategy, procurement Of presentation on focused effort way our in sure enhancing different on potentially to cover indexation group of course, and get course, enhancing been that that this during the to XXX, also to said, has we’ll will increase. clients, trying contracts have of cost also the the clauses to say, we all you course, as comfort. new we very, pass confidential. some With new course, is of give others I whenever the making the I in of would answer place, a product on

saying Regarding what project course, but the XX% of XX% can covered the and for steel, give there coverage other that, we course new on tower, the the course, hedge that for roughly cannot volume steel mentioned. those I of XXX the tower in already numbers for group is all we copper one the of we on can has materials steel, just cover that you of but of because, the the have the you -- some we already are for cover are roughly ‘XX, volume coverage physically copper, cannot or on and the

Operator

Thank you.

JP question ahead. Your next comes Akash from Please go Morgan. Gupta from

Akash Gupta

good afternoon, and and have on And a working up follow cash flow hi, Yes, Andreas question Beatriz. guidance and on one capital. I

basis guidance for And XXX because that entire it say So leading offshore some onshore I that basis by points wider also past. is on margin guidance, color come just range range? I have the or segments, XXX have to coming it is is back of driven on points to the we in higher back seen you uncertainties mean, than you is but providing this that if thanks have fair between that guidance,

Beatriz Puente

as range, is onshore we If is on more that that spread of split guidance. have. have you we it to to course environment higher said, due That concentrating the the on that, market

that more drop on I assumption projects than be that on might on have -- but impact also is the have stable offshore on saying higher revenue sorry, will As course, an the more said, also, execution on focused onshore. well, logistics the onshore costs as of we offshore also the

Akash Gupta

flow help on and flow at are bridge. if last for as maybe then, both X.X% out, cash be high finally, offshore. another year the of would level with revenues, and I before at have ahead cash would you us out, provisions if CapEx competition mean, restructuring is you back working would coming year EBIT as and you margin then we and capital, midpoint invest XX% working then And cash seen compared significantly look from as I And cash the on can guiding then which well in what to is be [ph]. capital, be your it very depreciation that of

XXXX? any flow fiscal on for cash So, Thank you. bridge comment year

Beatriz Puente

Thank you, Akash.

reducing the group also impact said, course, to the as continue for optimizing the of group also structural in you come As, cost. footprint will on ‘XX. the some important restructuring of It’s and

doing of working that alternatives And able also is of contribute capital, committed what are will of the not How are that discipline, the important this to cash for as that financial and a tell maintain has been investment different we committed finance have CapEx maintaining higher. ‘XX. that so to with strategic analyzing say, also will do achieve flow selective we well. that CapEx combination control that, Regarding of seen the can to is we assets grade you Andreas company are we assumptions, mentioned, let’s of to on of and it’s strict the our to have as we that course, group you leverage be we

Andreas Nauen

if we that. one and monetize looking development currently seeing is worked at to pipeline specific the allow Akash, that we’re you over years that we are investment on

Akash Gupta

Okay.

Operator

from Mark Thank you. Freshney Suisse. go The ahead. Credit comes next question from Please

Mark Freshney

question. taking Hi, hello, you thank for my

on Andreas, you going Regarding in. through about escalation the spoke and last contracts call, putting clauses

that able rollover, then procure benefit a of clients a would allude to even like lower now seems to that you. the guess, protection. Gamesa to as talk cost And contracts actually confirm capture charging or there in if roll protected have presumably case? that I still do it a Thank or you somewhere think you be for they any be commodity would that Siemens use at are of prices benefit, higher over, the most that’s downside? allude normalizes you Can I and degree steel i.e. as So or look, much you on

Andreas Nauen

Thank that. to you, there’s a general Mark, for think the answer question. don’t And I

of there’s in we hard and depends we fixed if therefore risk contingencies on many and we in say contracts which see we benefit. that. cost of higher with the we the in But as in hatching Your develop Beatriz wait then measures in also, also contracts clauses contracts, in to can measures the fully and I prices suppliers explained clauses, case benefit to is implemented project, many goes we are and means contracts. the much have be taking shared, also for pas wouldn’t would assumption to also benefit. all not will is down, the mentioned, the as clauses then not then must whether and question it’s in contracts the exactly the that. we And benefit, coverage different contracts, prices various that I so prices new To through or we which Escalation mix have year. means, backlogged still Beatriz said, additional which by QX without established, And the how well, in your that better that that a and how next in normal new very or we have to If of as have customer, part that, fully very and type have these it’s to portion fall, and individual place a cover the forget then mix difficult ‘XX if clauses second have with a of we we say. escalation cover the and commodity

Mark Freshney

Thank you.

Operator

you. Thank

Ajay from Patel go from Sachs. comes question ahead. Goldman next Please Your

Ajay Patel

Good afternoon. Thanks.

on So assumptions guidance. but is well, as around my question

clarity XXXX to elevated, yes, the guidance X.X% backwardating, [ph] here. that assumption of drives would of is helpful. is these, us just situation throughout there current or maritime really lasting prices feel the steel on an So give freighter target Any a elevated, margin what elevated, copper be there it

Beatriz Puente

of that freight for ‘XX. on copper and mean, of steel higher question, considered also cost I the have regarding you. we Thank course,

in have year. have have going and to have course, going we be the seen second that month. considered, quite been throughout will seen we cost the on the the is will is first -- considered be year, in intense to not last continue have year, whole what and high has weeks, throughout but of freight three we What on are that what we I hit two, that or, the inflation we what pressure considered quarter Of not to we say, us very see going the very, to last continue weeks last course, that is cost quarter

Ajay Patel

So on right. freight, specifically that’s

it way you in steel the in freight, and So some Is maritime and QX it? QX, backwardation of that elevated and assuming get there’s you’re that of copper, about right you’re stays thinking assumption then form making hit fall. and or

Beatriz Puente

right. Yeah,

as we And course, raw have last have constraints we you the tower, for materials, hit coverage the the execution, that seen copper, of seen have the Of materials. And important components. I we don’t fourth it’s speak throughout a that before we what assumption what the will that ‘XX the we have now compounded continue. taken we cover saying of shortage supply also and all I mentioned have on in the is we quarter. the was month for potential like is before, are raw has that rest has on for chains also When on our effect on steel specific to saying the have as been has us of components the that

Andreas Nauen

congestions only project. the say see what due getting and time the but Beatriz A logistics, add supply is what and the parts, not a chain materials to considered we simply not to just highlighted you capacity the are when parts last It’s the logistics B Now from And the what harbor constraints. that capacity, that but is that can in cost or now mean where as situation. and is -- we and be know factories them, freight that are, take that uncertainty the some don’t we but also getting you though simply raw planned even into ‘XX into seen and they on stress in and and to quarter putting parts assumptions Ajay, burden have simply arrive allow to we’ve they our if simply quite the we only you cost for the

Ajay Patel

make from clear. but sure There’s just it’s is sense obvious. that earlier, didn’t bit I’m Yeah, it one

about of next that is am XX% to I in the wondering steel year. I I think the do volume of copper. think said you that of just covered regards how and XX%

this that, copper higher than where to steel So is QX this than the are QX, negative lower now much is just at as that to now take as anything and equally you a we I’m prices of number I can than end how with end expect help. filter this trying then or through is benefit, of where understand a do a frame or could it anything I a and lower is

Andreas Nauen

There it and to the I like The would or and previous my answer customer a copper, it the like steel steel is mentioned tower depends influence answer. of neutral think that general that. to positive, associated negative to on Beatriz percentages it remaining contract I has whether no how results. all looks refer

situation individual So of that depends the project. each really on

Ajay Patel

Thank much. clear. very okay. very Okay, That’s you

Operator

you. Thank

You from next of Bank [indiscernible] America. question Please comes go from ahead.

Unidentified Participant

the Yeah. profitability. you And guys. first for onshore Thank questions. Good evening, question the is on

out, past, that onshore breakeven view the business can the in got said you ‘XX. you you let targeting your secondly, updated by when So were be us kind of know, can breakeven? the that end And said, pushed of Obviously, on pushed you then you an you I obviously this when is us presentation, of XX term you. target? give Thank being actually guide the that’s out. think achievable in to think the Can margin an update X on medium

Andreas Nauen

XX% we the long question, possible into bring exactly to onshore that the or in onshore major we all also mid-term, to ingredient factor in X% not onshore ‘XX, around see is back second be. success turn like corridor we the would them vision turn that. And to with brings [ph], to say major question. we will term around. that with then to And that say, ‘XX back that the Nathan onshore as get the when me is one connecting short to into simply in update that and I profitability and to back expect into uncertainty can the start the The

on year the turnaround The year clearly based improving more relatively next XX% service onshore being exactly successful, is say. coming, is the stable, but when uncertainty XX% are the than to in growth the We offshore the at profitability then to to reach over continue the with hard and years onshore X% good then last from breakeven, coming we of all growth.

Unidentified Participant

obviously Okay. facing. question. think just half first in second halfway because year, to that losses the things, how half of on should It just of you’re going be it’s And year a second that, Thank the sounds follow in very in quick XXXX, up last the logistics the that you. as though then about of Is kind year? the issues recovering that of the we so to

Beatriz Puente

of provided, -- that of course, we going now may the to is guidance environment. between are group X%, You on see current to back going it issues that EBIT, the X% to going be we of a -- to profitability providing that which is the you we the on guidance the back-loaded because have yes, is

Unidentified Participant

Okay, you Thank okay. very much.

Operator

comes Thank Sean McLoughlin you. Please next from ahead. Instructions] [Operator The question from HSBC. go

Sean McLoughlin

extra just I’m been projects, or this had stage related that the onerous so new QX set projects the your projects? increase you’ve reassured X.X wondering, million, About are at all you the us on a same covered in of contracts project? XX this there an same the Has provisions to is they

Beatriz Puente

you. Thank

and related the on the has – on higher say, activity XX the more As this million [indiscernible] freight highly those close to highlighted on increase quarter, execution same, issues, concentrated Euros mainly on is report, projects. the costs, we fourth two delays on also been this let’s to

Sean McLoughlin

the you to plant? reassurance we that give related onerous X.X And contracts can see any more won’t

Beatriz Puente

it out can company situation that up in a but processes the and prototypes that technology focus Brazil X.X avoid Andreas cost the all important, track well. of with management put X.X the has reassurance, plan the situation is we said, therefore that has company proven and on to you down we and procurement to cost the focus been the of X.X, out improvement to place the company the also enhanced as also has very has risk face to avoid been Whether settle the significant as get we also that cost of the that the the two in

Sean McLoughlin

Thank you.

Andreas Nauen

of do the to logistics that we the progress be for situation project. a main seen over practical now of give example still reviews Sean, – from numbers is remains the Brazilian there. It’s the Brazil the whole just you then the elements came it the development, from at the this did as And in from and production moment again. are of site that the the We We develops a yeah, QX that still be still to to Brazilian project. most QX I’m we today project part how the moment, the the the stabilize where the weekly project. of the and do with Friday. and back We planned. to and every get project looks that like, very Brazilian few on challenge, think depends the a with otherwise, the the remaining course But stable at it’s site. same, next At starting also impact progress, of and will see but whereas like always months. the I everything parts also quite logistics uncertainty satisfied

Sean McLoughlin

Thank you.

Operator

Thank you.

Your ahead. Please from from next comes UBS. question go Supriya Subramanian

Supriya Subramanian

you the medium-term thank I you on Hi, more evening on guidance, go top than to market. for Yes. taking the one question. expect faster and where had line good you my say that

LCoE it potential of through to the impact share do losses but potentially near market wind? course, well, do in little given pass on price onshore these offshore, could check achieve how up to volume go in growth, And you that be likely market medium as have material passed have get eventually, secondly, more three And being to still for you. to the wanted prices maybe plan five at raw a a in to to do theoretical, are term? and the the how years, let’s bit as over Just selectivity you leader, dampener XX% more does maybe the above the say, for potentially and business new in least to think market you and customers increases XX%, that – around material offshore, growth? you Thank clauses the next

Andreas Nauen

whether the let’s therefore the in in clearly we’ve I levels long because that resulting and onshore don’t wind the a If for offshore are LCoE the demand factor. and I costs. are growing generation and for requirements growing will the or in offshore. rapidly, than achieved question, Overall, wind now have especially any And in other material term in start say that the moment with second see LCoE effects price at dampening raw the lower

after, years, into be increase around technology clearly with is you reports our that think but there maintain And our in And then year, as out in demand not by when target and because will side. might issued slow the increased and much see don’t start at if little we how LCoE pass that a course situation. I in PPA you is market is -- even that That already major. top and we a and cannot in satisfying the and XX%. than tariff year don’t that to asked you still in clearly that showed even and have on And is demand and auctioned there’s clearly also like onshore growth growth -- about on I installed offshore promising. course the as next be an see of the business next seen a next different the flat few will extremely auction, a growth where growth. growth then the back. still we though that revenue customers that all we top short and are that we while I two also, the also is you in So different in XX the growth, Then expect an can into will than the that it’s case, at to currently would years improvements to look fleet market a see consultants, driven have or the and is onshore down effect the I said, of as there by general also come compensate growth strong also that and a our maybe a that auctions of also, that customer And term, slightly is I an tariff, they locked more gigawatts offshore, in, by us service

Supriya Subramanian

you Thank Great. much. very

Operator

next go The Deepa comes you. Thank last from Venkateswaran question from question Bernstein. the Please ahead. --

Deepa Venkateswaran

offshore Thank you. I a versus had question about onshore.

I Is driving a least ‘XX, imply guidance, X% even on and oxy-focus. a for so chain we should would wind? to early. to FY mean, to So it’s and has you components long-term breakeven these. the a and talked about comment issue by this implication, clarification the offshore be would clearly footprint all that or timing that made more these should next be a onshore should be bottlenecks by Is are small seems but it Maybe things broken supply ‘XX. like year have how It that so you difference? doesn’t hit the competitors. just contributing, offshore happening by on that this year have not the your at of with XX% something do only like got Would see presumably, so seem

just maybe clarification Thank So, you. a that. on

Andreas Nauen

difference take of often same last onshore and the ahead if that is slightly with onshore, cases difference. due implications different started have on shorter is not by safe much components components, cases are project quite relatively onshore many increase we time shortages I delivery they’re that simply in therefore, hand, the blades, delays for even we offshore Whereas the project. In sure we when also any the times the logistic then more offshore. would early situation are Beatriz, are and Maybe to especially Beatriz evening. and some in the we production it. whether I cost or a hit that and the the in In to and has the and said, onshore; very call main or times cycle also But execution mainly make think this the start the, produce installation also you project normally different as in to between we impacted and offshore. hits have in offshore question is side, we’ve offshore, by not and are impacted the that way that be shortages project onshore, the I And on logistics offshore. in in in it, -- and the could offshore offshore, sailed in starts major the And on also other and time always

to need the equipment onshore. We equal breakeven we equipment. way think an then is in transport hit question the also offshore I transport that and once for And

Beatriz Puente

make Yes, of I you a good kind assumption. mean,

if it it a the X% onshore the range and depending that be low point contribution contributing on are we the breakeven with of ‘XX to achieve Depending because, on will course, profitability a achieved range we end, let’s upper the if that long-term range providing is XX% we the course, a this range higher guidance timeframe because Of that onshore and on be small bit do we on ‘XX comes is of that X%, so. is and on the put way amount, will on there course, later. and

Deepa Venkateswaran

Okay. so much. Thank you

Andreas Nauen

you, Thank many of Beatriz. finish a like evening And the I us, with few concluding with to that, evening, remarks. would the from

interesting, questions questions hand on think especially, would exciting but this and good us, this answers will for you week more as forward is, than I good with I and price side. other how, hopefully roadshows. and forward Siemens such Glasgow, many equally for lots only term week shared little to on term you sure of after you Gamesa, the at we this enormously time, shows the I many has then, also many been for be like I think this firmly a industry, and think, your and all and one But evening challenging world development happy the this in a industry our future. new we in your course there thanks meeting be and to committed, near here, outlook. look in believe good you things in At here and are And this industry. and and at Friday a attention to interesting the whereas guidance, many the therefore, has year answering a challenging and all very one seven, to discussions everyone the effects, upcoming short meets And we like of from in say with Thank But this for outlook share very also much. especially these hand, the look of more long have First, of also same the patient I I’m and questions week.

Beatriz Puente

Thank you.

Siemens Gamesa Renewable Energy (GCTAY) 6 Nov 212021 Q4 Earnings call transcript