Wind turbine maker Siemens Gamesa posted a €466 million ($558 million) loss on Thursday as a string of impairment charges and a slump in onshore sales took their toll.

The company’s fiscal year Q3 results are the first under the leadership of new CEO Andreas Nauen, who previously headed up its offshore wind unit. Nauen replaced Markus Tacke on June 18.

The quarterly results were significantly impacted by impairment charges totaling €243 million. The bulk of this, €157 million, was related to restructuring in India, where the company is reorganizing its manufacturing footprint.

The news elsewhere was mixed: The service order backlog rose nearly 31 percent as the company reaps the benefits of last year's acquisition of Senvion's service business. Siemens Gamesa's dominant offshore wind segment grew its orders by 82 percent compared to the same period last year, but onshore orders fell 44 percent.

That divergence says a great deal about the company's challenges going forward.

“We have to be one SGRE,” Nauen said on a call with analysts (referring to "Siemens Gamesa Renewable Energy"). “The good things we do in offshore, the good things we do in service, we have to apply them to the entire company.”

“I'm very confident that we can turn around onshore and then be a successful company in total — no doubt," Nauen said. "We have a strong order backlog. [...] We also have robust finances. We have leading technology, and our people are also committed to making Siemens Gamesa a winner again."

Siemens Gamesa is the world's No. 2 supplier of wind turbines, trailing Vestas, but is the dominant supplier of offshore turbines outside of China, according to Wood Mackenzie.

Siemens Gamesa shares soar under new CEO Nauen

While the results make for painful reading, the positives are significant, and Nauen’s claims about the firm’s technology and financial footing are more than bluster. This autumn Siemens Gamesa will be tied into a soon-to-IPO spinoff company, Siemens Energy, giving it a dedicated parent where it will be the jewel in the crown.

Some of the challenges Siemens Gamesa faces are about the market and COVID-19 lockdowns, rather than company-specific problems. The market would appear to agree, with shares up 40 percent since Nauen was appointed six weeks ago.

Siemens Gamesa has an order backlog worth €31.5 billion, and another 9.3 gigawatts of offshore orders under preferred-supplier agreements and conditional orders.

The hostile renewable-energy investment environment in Mexico and a slowdown in India caused by COVID-19 were major contributors to the troubles at the onshore business. All told, Siemens Gamesa has warned that its COVID-19 impact could reach as much as €1 billion in 2020.

Despite these and pre-COVID problems, such as derailed project builds in Norway, the company reinstated guidance for the year, which had been suspended since April. Revenue for 2020 is now forecast at €9.5 billion to €10 billion. Its final revenue guidance pre-pandemic, given in early February, was €10.2 billion to €10.6 billion.

New leadership at the onshore wind division

Earlier this week, Siemens Gamesa poached Vestas' head of innovation, Jorge Magalhães, to become its new head of onshore technology. After Thursday’s results call, the company also appointed Lars Bondo Krogsgaard as head of its onshore business unit. He has previously been co-CEO at MHI Vestas and CEO of Nordex. Beatriz Puente also joined the company as its new CFO as the changes continue.

The fortunes of Siemens Gamesa's 5.X onshore wind platform and the company itself will be closely intertwined in the years ahead.

On the call, Nauen said the firm had worked with independent third parties to assess its 5.X platform, and the consensus is that the turbine itself is solid. The challenge Magalhães has been hired to meet, then, is about “industrializing” the machine so that it's also competitive on cost.

“There's a lot of knowledge in the company. But on the other hand, we also need to add industry knowledge and maybe...even knowledge outside of the wind industry,” said Nauen.

“The 5.X is going to represent a lot of our revenue in the future, so [we] will put a lot of effort into making that turbine successful."