Siemens Energy, Orsted, and Vestas, three of the world’s leading wind power companies, have revealed their financial performance.
Siemens Energy
Siemens Energy witnessed a notable surge in orders, soaring by 23.9 percent to €15.4 billion on a comparable basis, excluding currency translation and portfolio effects. The company’s book-to-bill ratio surpassed 2, propelling the order backlog to an all-time high of €118 billion.
Siemens Energy’s revenue climbed to €7.6 billion, marking a 12.6 percent increase on a comparable basis, with particularly strong growth observed in Grid Technologies.
Siemens Energy reported a net income of €1,582 million, a stark contrast to the net loss of €598 million in Q1 FY 2023. Looking ahead, for the fiscal year ending September 30, 2024, Siemens Energy anticipates comparable revenue growth in the range of 3 percent to 7 percent and a profit margin before special items between minus 2 percent and plus 1 percent.
Orsted
Orsted said its operating profit (EBITDA) for the year reached DKK 18.7 billion. Excluding new partnerships and cancellation fees, EBITDA stood at DKK 24.0 billion, exceeding the guidance range of DKK 20-23 billion. Notably, EBITDA from offshore sites more than doubled to DKK 20.2 billion in 2023, driven by the ramp-up of generation at Hornsea 2 and Greater Changhua 1 and 2a.
However, Orsted reported a provision of DKK 9.6 billion for cancellation fees related to the decision to cease the development of Ocean Wind 1, alongside impairment losses of DKK 26.8 billion, primarily attributed to Ocean Wind 1.
Despite these challenges, Orsted reported a net profit of DKK -20.2 billion, with a return on capital employed (ROCE) of -14 percent. Excluding impairment losses and cancellation fees, net profit and ROCE amounted to DKK 14.9 billion and 12.9 percent, respectively.
Vestas
Vestas achieved a strong performance in 2023, with revenue reaching EUR 15,382 million, surpassing the outlook range of EUR 14.5-15.5 billion.
Vestas reported an EBIT margin before special items of 1.5 percent, exceeding expectations, and total investments of EUR 823 million. The combined order backlog across Power Solutions and Service surged to EUR 60.1 billion.
Looking ahead to 2024, Vestas expects revenue to range between EUR 16 billion and 18 billion, including Service revenue.
Vestas aims for an EBIT margin before special items of 4-6 percent and anticipates total investments of approximately EUR 1.2 billion. The Service segment is forecasted to generate EBIT before special items in the range of EUR 800 million to 880 million.
CHALLENGES
Siemens Energy, Orsted, and Vestas have presented a cautious outlook for the upcoming year, highlighting challenges such as project delays, equipment issues, and inflation within the industry, Reuters news report said.
Siemens Energy, renowned as the largest manufacturer of offshore wind turbines globally, anticipates a loss before special items of approximately 2 billion euros ($2.2 billion) at its subsidiary, Siemens Gamesa, in 2024. The wind division has encountered expenses associated with rectifying quality concerns affecting certain onshore models.
CEO of Siemens Energy, Christian Bruch, acknowledged the robust fundamentals within the energy sector but emphasized the need for accelerated expansion in renewable energy and grid infrastructure. He noted that despite significant growth, particularly in China, global renewable capacity might not meet the ambitious targets set at last year’s COP28 climate summit in Dubai.
Rising prices of raw materials and components, coupled with regulatory hurdles, have led to write-downs and losses across the wind industry, despite sustained demand for renewable technology. Turbine manufacturers have been particularly affected by these challenges.
Danny van Doesburg, senior portfolio manager at Dutch APG Asset Management, underscored the necessity for governmental intervention to address market inefficiencies and ensure equitable distribution of profits throughout the value chain.
Anders Schelde, chief investment officer at Danish fund Akademikerpension, echoed the sentiment, stressing the urgency to recalibrate market conditions in offshore wind to restore profitability.
Vestas, the world’s leading wind turbine manufacturer, announced the suspension of dividends for 2023. Vestas CEO Henrik Andersen emphasized the company’s commitment to fair collaboration with developers and governments while navigating industry challenges.
Orsted, the largest offshore wind project developer globally, unveiled plans for a portfolio review and job cuts in response to substantial write-downs on delayed U.S. projects.
Orsted CEO Mads Nipper outlined efforts to streamline operations and enhance competitiveness, aiming to reduce fixed costs by 1 billion Danish crowns ($144 million) by 2026, with anticipated job cuts in the coming years.
Despite lower returns, Norwegian oil and gas group Equinor affirmed its commitment to offshore wind and renewable energy, aligning with its long-term strategy to diversify revenue streams.
Baburajan Kizhakedath