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Constraining onshore wind power business restructuring, Siemens Energy has a net loss of 560 million euros in its first fiscal year

       Constrained by Siemens Gamesa Renewable Energy Company (hereinafter referred to as "Siemens Gamesa") onshore wind power business restructuring costs and losses, Siemens Energy AG (hereinafter referred to as "Siemens Energy") in the first fiscal year "transcript" after its establishment, It's not pretty.
   On November 10, Siemens Energy's annual press conference was held in Munich, Germany. Siemens Energy announced the main financial data for the 2021 fiscal year (as of September 30, 2021). The data shows: Siemens Energy's new orders for fiscal 2021 are at a high level, reaching 33 billion euros. The amount of new orders fell slightly, down by 2.9% year-on-year, but it is still expected. As of the end of the 2021 fiscal year, the total reserve orders at the group level reached 83.8 billion euros. Thanks to the growth of the two major business sectors, Siemens Energy's revenue in the 2021 fiscal year increased by 3.7% to 28.5 billion euros, which is within the range of performance guidance.
"Affected by the restructuring of Siemens Gamesa Renewable Energy's onshore wind power business plan and some known issues, Siemens Energy's overall net loss." Siemens Energy CEO Christian Bruch (Christian Bruch) Express.
   Siemens Gamesa continues to lose money
   In fiscal 2021, Siemens Energy’s new orders decreased slightly, and operating profit increased significantly.
   In this regard, Siemens Energy stated that on the one hand, it was affected by changes in the exchange rate, and on the other hand, due to the high new orders of Siemens Gamesa Renewable Energy last fiscal year. In the oil and gas and power business sector, the power transmission business performed strongly in terms of orders. Especially in the high voltage direct current transmission (HVDC) business, Siemens Energy won orders including the SuedOstLink and SuedLink projects in Germany. Recently, Siemens Energy also won its first large-scale offshore wind power grid-connected project along the coast of New York State in the United States.
   Excluding special items, Siemens Energy achieved adjusted earnings before interest, tax and amortization (EBITA) of 661 million euros, which significantly pushed up revenue for the 2021 fiscal year. Last fiscal year, the financial report showed a loss of 17 million euros. The boost in revenue was mainly due to the positive impact of operational optimization measures in the oil and gas and power businesses.
   Excluding special items, the adjusted EBITA profit margin has reached the adjusted performance guideline range of 2.3%. Special project expenses in the 2021 fiscal year are 673 million euros, mainly including expenses incurred due to mergers and reorganizations, and a small amount of one-time costs left over from the spin-off work. The adjusted EBITA lost 12 million euros, almost reaching the break-even point. In the previous fiscal year 2020, due to restructuring, non-recurring costs, and asset portfolio-related impairment losses, this loss amounted to approximately 1.5 billion euros.
   Affected by the loss of special projects and Siemens Gamesa Renewable Energy, Siemens Energy has a net loss of 560 million Euros at the end of the 2021 fiscal year. This is a significant increase compared to the net loss of approximately 1.9 billion euros in the previous fiscal year. Free cash flow before taxes increased by 39.1% to approximately 1.36 billion euros.
   withdraw from sales of onshore wind turbines in China
   This year is the first fiscal year for Siemens Energy to achieve independent operations. As an energy technology company, Siemens Energy was completely divested from Siemens AG in September 2020, and listed on the Frankfurt Stock Exchange on September 28, and was included in the German MDAX index in December of the same year. On March 22, 2021, Siemens Energy officially became a member of Germany's most important stock index, the DAX index. According to estimates, one-sixth of the world's total power generation is based on Siemens Energy's technology.
   Siemens Gamesa was formed by the merger of the original Siemens wind power business and Gamesa. Gamesa was established in 1976 and officially entered the wind energy field in 1994; in 2004, Siemens officially entered the wind energy industry through the acquisition of Bonus Energy. On April 3, 2017, Siemens Wind Power and Gamesa completed the merger, headquartered in Zamudio, Spain. In May 2019, Siemens announced the merger of its natural gas and power divisions and renewable energy businesses, and at the same time transferred its 59% stake in Siemens Gamesa to an independent new business company-Siemens Energy. On September 28, 2020, Siemens Energy was listed on the Frankfurt Stock Exchange. Siemens Energy holds a total of 67% of Siemens Gamesa.
   The weakness of Siemens Gamesa's onshore wind turbine orders is continuing to drag down the performance of the parent company Siemens Energy. In September 2020, the incoming CEO Andreas Nauen announced that Siemens Gamesa would make major strategic adjustments, focusing on saving the troubled onshore wind power business. However, from the 2020-2021 financial report released by Siemens Energy, the performance of Siemens Gamesa Renewable Energy is not satisfactory.
  With the continuous advancement of the localization of wind turbines, local machine-manufacturing brands gradually occupy half of the domestic wind power market, and Siemens Gamesa's share of China's onshore wind power market has been declining. On August 27, Andreas Nauen said in an interview with the media that “the sales of wind turbines in China will be suspended and prices will be increased by 5% globally”. In other words, Siemens abandoned the onshore wind power sales market in China and only sold overseas markets, while its wind turbine blade production in Shanghai and complete wind turbine manufacturing in Tianjin will continue. According to the research report of Ping An Securities, in the first half of 2021, the price of wind turbines that won the bid in the Chinese market has fallen below 2,500 yuan/kW, which is nearly "halved" compared to the price peak of 4,200 yuan/kW at the time of rush installation. Andreas Nauen believes that this situation is not in line with Siemens Gamesa's interests.
   Compared with the "defeat" of onshore wind power in the Chinese market, Siemens Gamesa's offshore wind power deployment is accelerating. At the just-concluded "Fourth China International Import Expo", National Energy Group United Power Technology Co., Ltd. and Siemens Gamesa signed a memorandum of understanding on cooperation. According to the agreement, United Power will introduce Siemens Gamesa's 11 MW direct-drive offshore wind power technology to produce and apply the latest generation of high-power models of Siemens Gamesa's direct-drive technology platform that has been put into production in mainland China.
   Significantly increase the net income target in fiscal year 2022
   In the fourth quarter of fiscal 2021, Siemens energy orders grew strongly, with a year-on-year increase of 30.2%, reaching 9.1 billion euros.
   China Industry News learned that this was mainly due to several large orders from the two major business sectors. These include the SuedLink power grid expansion project, which aims to transmit wind power from the North Sea region to southern Germany; in addition, Siemens Energy has also won the Sunba Power Combined Cycle Project, which will build a power plant with an installed capacity of 1,100 MW in Taiwan. The completion of the project will become an important part of the energy transition in Taiwan, aiming to shift from coal power and nuclear power to environmentally friendly gas and renewable energy power generation.
   In the new fiscal year, can Siemens Energy turn negative to positive and get rid of its loss?
       The plan shows that in fiscal year 2022, Siemens Energy expects comparable revenue (excluding the impact of exchange rate changes and business portfolio) to be within the target range of minus 1% to 3% (actually 6.0% in fiscal year 2021), excluding special items , The adjusted EBITA profit rate target is 3% to 5% (the actual fiscal year 2021 is 2.3%). Siemens Energy expects to significantly increase its net income target (a net loss of 560 million euros in fiscal 2021). Free cash flow before taxes is expected to reach hundreds of millions of euros (1.358 billion euros in fiscal year 2021).
In fiscal year 2022, comparable revenue growth in the oil and gas and power business is expected to be between 1% and 5% (4.1% in fiscal year 2021). Excluding special projects, the adjusted EBITA profit margin is expected to be 4.5% to 6.5% ( 4.6% in fiscal year 2021).
   It is worth noting that in the 2022 fiscal year, Siemens Gamesa’s renewable energy business revenue is still facing the risk of decline. The decline is expected to range from minus 2% to minus 7% (9% growth in fiscal 2021). Excluding special items, the adjusted EBITA profit margin is expected to be in the range of 1% to 4% (minus 1.0% in fiscal 2021).
   It is also learned that Siemens Energy will release a complete annual report on December 7, 2021, and a sustainability report on January 25, 2022.

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