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SIEMENS GAMESA: 4Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 2.868 Bn (-2.6% vs. +1.4% BS(e) and +4.7% consensus);
Adjusted EBIT: € 31.0 M (-87.6% vs. -82.9% BS(e) and -61.6% consensus);
Reported Net Profit: € -113 M (€ 52.0 M in 4Q'19 vs. € -117.0 M BS(e) and 21.0 M consensus).
FY2020 vs. FY 2019:
Sales: € 9.483 Bn (-7.3% vs. -6.1% BS(e) and-5.2% consensus);
Adjusted EBIT: € -233.0 M (€ 725 M in 2019 vs. € -221 M BS(e) and € -168 M consensus);
Reported Net Profit: € -918 M (€ 140 M in 2019 vs. € -923 M BS(e) and € -785 M consensus).

Weak 4Q’20 Results that came in below expectations in sales (-4% vs. BS(e) and -7% vs. consensus) and in adjusted EBIT (€ 31 M vs. 43 BS(e) and 96 consensus). Net debt came in at € 49 M, better than our estimate (€318 M BS(e) and in line with the consensus. Thus, the adjusted EBIT margin stands at 1.1% (vs. 8.5% in 4Q’19). Reported Net profit dropped to € -113 M (vs. € -117 M BS(e) and € 21 M consensus).
Thus, as of the end of 2020, the company has obtained € 9.48 Bn in sales (-7% vs. 2019), which stands slightly below the guidance range of between € 9.5 Bn and € 10 Bn, with the adjusted EBIT margin coming in at -2.5% (7.1% in 2019), within the guidance of between -3% and -1%. We recall that, in addition to the Covid-19 impact (€-118 M in EBIT; €-31 M in 4Q), the FY2020 results were negatively affected mainly by the slowdown in the Indian market (and the resulting restructuring in this region) and problems in the execution of a number of projects in Northern Europe (both factors totalling €-319 M; with no impact in 4Q).
The backlog stands at € 30.25 Bn (+19% vs. 2019), with order intake falling by -14% on the quarter vs. 4Q’19 to € 2.71 Bn (0.9x BtB), where the Offshore division did not receive any orders over the period (as expected). As for prices, Onshore’s ASP fell to € 0.63 M/MW vs. € 0.73 M/MW the previous quarter), although the company talks of stable prices (effect from FX and scope of projects).
Net debt came in at € 49 M, better than our estimate (€ 318 M BS(e) and in line with the consensus thanks to the better-than-expected performance of working capital. In this regard, the company stresses its liquidity position with around € 3.1 Bn of undrawn lines of credit.
The company confirmed its 2021 guidance with sales of € 10.2/11.2 Bn and an adjusted EBIT margin of between 3% and 5%. In the long-term, the group outlined that the future growth prospects continue to be positive (even better).
Even though results came in below expectations in sales and adjusted EBIT, the fact that net debt was in line with the consensus and that it maintains its 2021 guidance unchanged could offset the results and lead to a neutral reaction. The share price has soared +90% vs. IBEX since the Ibex highs on Feb’20. SELL. T.P. € 17.95/sh. (-28.97% potential).