Shares in rival wind turbine makers Siemens Gamesa and Vestas fell on Friday as a squeeze on prices caused by reduced state subsidies took its toll on quarterly profits.
The wind power industry is undergoing a period of painful readjustment as governments from Europe to Latin America rein in subsidies and turn to competitive tenders, putting pressure on prices throughout the supply chain.
“It’s challenging across the board, it’s very competitive,” Vestas’ chief financial officer Marika Fredriksson told Reuters.
Vestas’ operating profit for the January-March period of €126 million ($150.7 million) was a decline of 40 percent and also lagged analysts’ forecast of €137 million.
Majority owned by Germany’s Siemens following a merger of its wind power business with Spain’s Gamesa last year, Siemens Gamesa said adjusted operating earnings for the same period fell 40 percent to €189 million.
Shares in Denmark’s Vestas fell 4.4 percent in early trading while Siemens Gamesa traded down 3.4 percent.
Vestas’ average selling price per megawatt came in at around 740,000 per megawatt, which was flat from the previous quarter.
However, both companies cautioned it was still too early to say if prices had stabilized after a double-digit decline seen last year.
“It could appear so, but we still want to have more sustainable and long-term view on the stabilization of the market,” Vestas’ Fredriksson said.
That caution was echoed by Siemens Gamesa.
“It’s the second quarter of stable average selling price of the order intake ... (but) we’re not able to determine if this is already a trend,” Siemens Gamesa CFO Miguel Angel Lopez, told a conference call.
Most recent rankings by consultancy firms GlobalData and MAKE show Siemens Gamesa claiming the top spot in terms of sold turbine capacity last year, overtaking Vestas in a race to cater the competitive wind power sector.
Vestas is still a market leader in terms of total installed capacity, said Vestas citing MAKE.
Siemens Gamesa, which counts Spanish energy group Iberdrola among its key shareholders, kept its target for an EBIT margin of 7-8 percent this year.
Vestas still targets an EBIT margin of 9-11 percent this year.
Siemens Gamesa in February unveiled 2 billion euros in cost cuts by 2020 to close a margin gap to Vestas, both facing margin pressure as government cuts support for renewables to force them into competition with conventional energy sources.
Siemens Gamesa more than doubled its quarterly order intake to 2.5 GW, while Vestas order intake came in at 1.6 GW.
Global wind turbine makers hit by subsidy squeeze
Global wind turbine makers hit by subsidy squeeze
- Q1 profits at Vestas and Siemens Gamesa fall as renewable energy subsidies withdrawn around the world
- “It’s challenging across the board, it’s very competitive,” says Vestas’ chief financial officer Marika Fredriksson
Saudi investment pipeline active as reforms advance, says Pakistan minister
ALULA: Pakistan’s Finance Minister Mohammed Aurangzeb described Saudi Arabia as a “longstanding partner” and emphasized the importance of sustainable, mutually beneficial cooperation, particularly in key economic sectors.
Speaking to Arab News on the sidelines of the AlUla Conference for Emerging Market Economies, Aurangzeb said the relationship between Pakistan and Saudi Arabia remains resilient despite global geopolitical tensions.
“The Kingdom has been a longstanding partner of Pakistan for the longest time, and we are very grateful for how we have been supported through thick and thin, through rough patches and, even now that we have achieved macroeconomic stability, I think we are now well positioned for growth.”
Aurangzeb said the partnership has facilitated investment across several sectors, including minerals and mining, information technology, agriculture, and tourism. He cited an active pipeline of Saudi investments, including Wafi’s entry into Pakistan’s downstream oil and gas sector.
“The Kingdom has been very public about their appetite for the country, and the sectors are minerals and mining, IT, agriculture, tourism; and there are already investments which have come in. For example, Wafi came in (in terms of downstream oil and gas stations). There’s a very active pipeline.”
He said private sector activity is driving growth in these areas, while government-to-government cooperation is focused mainly on infrastructure development.
Acknowledging longstanding investor concerns related to bureaucracy and delays, Aurangzeb said Pakistan has made progress over the past two years through structural reforms and fiscal discipline, alongside efforts to improve the business environment.
“The last two years we have worked very hard in terms of structural reforms, in terms of what I call getting the basic hygiene right, in terms of the fiscal situation, the current economic situation (…) in terms of all those areas of getting the basic hygiene in a good place.”
Aurangzeb highlighted mining and refining as key areas of engagement, including discussions around the Reko Diq project, while stressing that talks with Saudi investors extend beyond individual ventures.
“From my perspective, it’s not just about one mine, the discussions will continue with the Saudi investors on a number of these areas.”
He also pointed to growing cooperation in the IT sector, particularly in artificial intelligence, noting that several Pakistani tech firms are already in discussions with Saudi counterparts or have established offices in the Kingdom.
Referring to recent talks with Saudi Minister of Economy and Planning Faisal Alibrahim, Aurangzeb said Pakistan’s large freelance workforce presents opportunities for deeper collaboration, provided skills development keeps pace with demand.
“I was just with (Saudi) minister of economy and planning, and he was specifically referring to the Pakistani tech talent, and he is absolutely right. We have the third-largest freelancer population in the world, and what we need to do is to ensure that we upscale, rescale, upgrade them.”
Aurangzeb also cited opportunities to benefit from Saudi Arabia’s experience in the energy sector and noted continued cooperation in defense production.
Looking ahead, he said Pakistan aims to recalibrate its relationship with Saudi Arabia toward trade and investment rather than reliance on aid.
“Our prime minister has been very clear that we want to move this entire discussion as we go forward from aid and support to trade and investment.”
