January 30, 2020 / 11:22 AM / a month ago

Siemens Gamesa shares sink 10% after margin forecast cut

FILE PHOTO: A model of a wind turbine with the Siemens Gamesa logo is displayed outside the annual general shareholders meeting in Zamudio, Spain, June 20, 2017. REUTERS/Vincent West/File Photo

MADRID (Reuters) - Wind turbine manufacturer Siemens Gamesa cut its full-year profitability target for the second time in three months on Thursday, sending its shares down 10%.

The German-Spanish company cited a one-off 150 million euro ($166 million) charge related to delays on five onshore projects in Northern Europe due to the early onset of wintry weather and adverse road conditions as the reason for the downgrade.

The company said it now expected the margin on its earnings before interest and taxes (EBIT) to be between 4.5% and 6%, down from previous guidance of between 5.5% and 7%.

Siemens Gamesa and peers including Denmark’s Vestas have suffered steep declines in prices in recent years as governments began moving away from generous guaranteeing fixed tariffs for power and towards competitive auctions.

Further squeezed by a rise in the cost of key turbine component steel, Siemens Gamesa had in November already cut the EBIT margin guidance for its fiscal year to the end of September 2020. The firm had originally forecast an EBIT margin of 8-10%.

Its shares fell as much as 10% in early trading, and were changing hands around 14.35 euros at 0845 GMT.

The downgrade should have a limited impact on the company’s bottom line, but uncertainty remains high, brokerage Sabadell said in a note to clients. it has a sell rating on Siemens Gamesa shares.

For the three months to December, the firm posted a net loss of 174 million euros, down from an 18 million euro net profit in the same period a year earlier.

($1 = 0.9014 euros)

Reporting by Inti Landauro, additional reporting by Isla Binnie; editing by John Stonestreet

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