Wind turbine maker Siemens Gamesa is charging higher prices, combing over contracts and hedging harder against rising raw materials costs to try to heave its business back to profit.
After a loss-making first nine months, Siemens Gamesa said its profit margin would be flat or negative this year as its onshore unit flounders.
Siemens Gamesa rival Vestas is yet to make any announcement on the price increase on its wind turbine.
Siemens Gamesa announcing the financial results said rising commodity prices and higher ramp-up costs for the 5.X platform resulted in provisions for onerous contracts related to projects executed in FY 2022 and FY 2023 impacting financial performance in the quarter.
It is hiking prices between 3 percent and 5 percent for its onshore turbines, putting clauses in contracts to pass on more expensive steel, and strengthening traditional hedging for copper, Siemens Gamesa Chief Executive Andreas Nauen said.
Nauen said all original equipment manufacturers (OEMs) would be affected.
“The raw material increases will make renewable projects more expensive and there’s clearly no margin left in the OEMs, on our side, and we will have to pass that through. In the end, prices for renewables and wind projects will slightly increase.”
Siemens Gamesa has struggled to contain the cost of developing a new onshore platform, especially in Brazil, where it complains of supply chain and logistical bottlenecks.
It is also looking for alternatives to materials such as balsar wood.
The company has lost almost a third of its market value this year, extending a renewable sector-wide fall that began in January.
Between April and June, Siemens Gamesa’s revenue increased by 12 percent to €2.704 billion. EBIT pre PPA and before I&R costs amounted to –€151 million in the third quarter, with an EBIT margin of –5.6 percent. The company reported net loss €314 million.
Siemens Gamesa’s revenue rose by 11 percent to €7.335 billion in the first nine months to June 30. EBIT pre PPA and before I&R costs totaled €81 million, i.e. an EBIT margin of 1.1 percent. Siemens Gamesa has posted net loss of €368 million in the first nine months.