Siemens Gamesa’s CEO raises alert; cost inflation to linger till 2023

The raw material supply chain is facing serious crunch since the COVID-19 pandemic outbreak. In this league, wind turbine maker Siemens Gamesa Renewable Energy’s outgoing Chief Executive Officer, Andreas Nauen, recently declared that the supply chain disruptions and cost pressures troubling the turbine makers will reportedly last until the end of 2023.

Andreas stated that the company remains uncertain about the price reductions happening by the end of 2023, due to which the pricing for 2024 is impossible to predict.

Apparently, Siemens Gamesa has joined the bandwagon of the other turbine manufacturers in raising prices of their products, in order to compensate for the cost inflation of raw materials and supply.

Nauen claimed that the company has failed to receive mechanical and electronic components, as ordered, which resulted in the disruption of turbine production.

Reportedly, the crunch has mainly halted the production of nacelle, and not affected the production of blade as it relies on materials like fiber-glass.

As per credible sources, the company has lowered its guidance for 2022, and now expects an Ebit margin apart from the effect of integration, price purchase allocation (PPA) and restructuring (I&R) in between -4% and 1%, which was earlier predicted as 1-4%.  

Imperatively, Siemens Gamesa observed a loss of €309 million (Ebit, I&R, PPA) during the first quarter of its financial year, October-December 2021.

In order to manage shortages arising from the supply crunch, Siemens Gamesa has placed large quantities of orders and also rescheduled some.

Nauen commented that the wind power segment is facing extreme difficulties in earning cycle presently. He added that the OEMs remain in an extreme struggling and difficult spot to gain profit.

However, he believes that the value of the company is way beyond price, as it brings along multiple benefits for the society like job creation, energy transition and much more.

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