Renta 4 | For the time being, the company is unable to provide any advance of a new level of estimates (foreseeably they will be able to offer greater visibility during the results’ presentation on May 5). However, they hope to obtain a margin in the low range of the previous guideline on objectives, -4%. This is thanks mainly to the sail of the assets in promotion in southern Europe, where a positive impact at EBIT level pre PPA of 550 million euros is expected. In other words, without this effect the EBIT margin pre PPA could be around -10% (R4e-11.1%). The company affirms that its long term view remains unchanged, although the high level of uncertainty due to the global situation is complicating visibility with regard to when the environment will normalise. For that reason, we have decided to be somewhat cautious with our hypotheses on long term prices and volumes.
The geopolitical situation continues to fuel significant deterioration…
The conflict in the Ukraine has meant that the macro deterioration which the pandemic dragged along with it is causing additional pressure on Siemens Gamesa’s accounts. An increase in energy and logistics costs, a rise in raw material prices and bottle necks which have meant that certain wind turbine components have not been available. Furthermore, delays in clients’ investment decisions, mainly in the onshore area, are fuelling an additional worsening of the group’s margins, approximately 1/3 of the additional deterioration.
… Added to which there are different internal factors that, for the moment, have still not been reverted
2/3 of the additional deterioration corresponds to internal factors. Product and execution issues mainly related to greater complexity involved in the launch of the 5.X. platform compared with estimates. Although Siemens Gamesa continues to evaluate the order book, it has still not found the key to turn the onshore business around and make it profitable again.
Conclusion: We have revised our T.P. P.O. to 14,40 euros (vs 17,52 previously)
We are assuming a scenario in onshore of light growth in volume with stable prices, hoping breakeven is reached in 2025. In offshore, an uptick is estimated in volume from 2025 with a slight deterioration in prices, expecting a stable margin of around 8% (the company forecasts an uptick in prices in both areas). With regard to services, we expect the area will continue to show low single digit growth, with margins of 20%. Given the uncertainty created by the current environment, we reiterate caution with the stock and our UNDERWEIGHT stance.
