Gas and Power resilient while SGRE again weighing down Group results – Major initiatives taken to shape Siemens Energy for the energy transition

“Our Gas and Power business has once again delivered in the recent quarter and thus proven its resilience. Despite unprecedented macroeconomic challenges, we see sharply higher order volumes with growing demand for our technologies to facilitate the energy transition. On top of maneuvering the daily operations, the Gas and Power team started to set the course for a new organizational structure aimed at significantly reducing complexity and shortening the decision-making processes. And yet there are also again drawbacks in the third quarter. Siemens Gamesa continued to experience high losses in a challenging market environment. The poor performance at Siemens Gamesa had a negative impact on our overall results. We expect the new management at Siemens Gamesa now to implement a rigorous turnaround plan. During the quarter we launched a cash tender offer for the outstanding minority shares in Siemens Gamesa with the intention to delist and fully integrate its operations”, says Christian Bruch, President and CEO of Siemens Energy AG.

• In the recent quarter, Gas and Power (GP) achieved another solid performance despite unfavorable geopolitical and macroeconomic factors which continue to impact Siemens Energy’s business development overall. While both segments faced strong headwinds from increased material and logistic costs as well as supply chain constraints, GP demonstrated resilience due to stringent measures taken based on its operational excellence program.

• Siemens Energy started the restructuring of its business activities in Russia in the third quarter which burdened the result of GP by €0.2bn, reported as strategic portfolio decisions under special items. These restructuring activities are expected to be concluded by end of this fiscal year without further significant financial impact.

• Orders continued to be strong with growth of 60.0% year-over-year on a comparable basis (excluding currency translation and portfolio effects). Both segments contributed to the increase, resulting in third quarter orders of €9.8bn driving order backlog to another record of €93.4bn.

• Revenue of €7.3bn was down by 4.7% on a comparable basis as growth at GP was more than offset by a decline at Siemens Gamesa Renewable Energy (SGRE).

• Despite burdens from supply chain constraints, GP reported a positive Adjusted EBITA before special items of €212m nearly on prior-year quarter’s level. Due to the high loss at SGRE, Siemens Energy’s Adjusted EBITA before special items was negative €131m (Q3 FY 2021: positive €54m). Special items amounted to negative €298m (Q3 FY 2021: negative €178m) largely related to the restructuring of business in Russia. Adjusted EBITA for Siemens Energy came in at negative €429m (Q3 FY 2021: negative €124m).

• Accordingly, Siemens Energy’s Net loss was €533m (Q3 FY 2021: negative €307m). Corresponding basic earnings per share (EPS) were negative €0.54 (Q3 FY 2021: negative €0.32).

• Free cash flow pre tax decreased to negative €25m (Q3 FY 2021: positive €328m) driven by SGRE while GP exceeded the strong prior-year quarter’s level.

• On May 21, 2022, Siemens Energy AG announced a voluntary cash tender offer to acquire all outstanding shares in Siemens Gamesa Renewable Energy S.A., i.e., approximately 32.9 percent of the share capital, which Siemens Energy AG does not already own. The minority shareholders will be offered €18.05 per share in cash. Following a successful closing of the transaction, Siemens Energy AG intends to pursue a delisting of Siemens Gamesa Renewable Energy S.A. from the Spanish stock exchanges, where it currently trades as a member of the IBEX 35 index. In June 2022, a €1.15bn cash deposit was pledged in favor of the Spanish National Securities Market Commission which reduced Siemens Energy’s Net cash position at the end of recent quarter.

• Although further negative effects associated with geopolitical and macroeconomic challenges cannot be ruled out, management still expects to achieve its outlook given for GP and Siemens Energy excluding effects from lost revenue in connection with business in Russia for comparable revenue growth. Net loss of Siemens Energy in fiscal year 2022 is expected to exceed prior year’s net loss approximately by the impact from the restructuring of business in Russia reported as special item.

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