For Siemens Energy, the wind turbine subsidiary Siemens Gamesa is becoming a bottomless pit. Because of numerous problems, the energy company canceled its forecast and expects additional costs in the billions.
The problems at the wind turbine subsidiary Siemens Gamesa are more serious than expected. The parent company Siemens Energy is also suffering from the ailing subsidiary: “The setback is more severe than I would have thought possible,” said Siemens Energy boss Christian Bruch in an analyst call. Too much had been swept under the rug.
Yesterday, Siemens Energy admitted that “significantly increased” failure rates were found during technical checks on some components of Siemens Gamesa’s wind turbines. So far, only an interim report on the functionality of the wind turbines is available on the results of the review.
However, this already makes it clear: In order to ensure functionality, many turbines would have to be replaced or repaired. According to the company, the repair should cost over a billion euros. In January, Gamesa had already set aside almost half a billion euros for warranty and maintenance costs because parts on the wind turbines were failing frequently.
The hoped-for improvements in productivity at Siemens Gamesa also fell short of expectations. Business with wind turbines on the high seas is also bumpy: “In addition, we continue to see difficulties in ramping up production capacities in the offshore sector,” explained Siemens Energy.
Earnings Forecast collects
This is not the first time that the parent company is suffering from this, which as a consequence of the problems at Siemens Gamesa has now dropped its earnings forecast for the current year. The Munich-based group had already expected a net loss of more than 800 million euros for 2022/23 (end of September). Siemens Gamesa has already spoiled the plans for the Munich company several times. In order not to have to withdraw a forecast again, Siemens Energy did not want to issue a new forecast just yet.
However, the company is maintaining the sales forecast for the group and all assumptions for gas services, grid technologies and the transformation of industry. In terms of consolidated sales, the company expects comparable sales growth of ten to twelve percent.
Investors reacted in shock on the stock exchanges. The Siemens Energy share, which is listed in the leading index DAX, initially fell by 11.4 percent to 20.35 euros in late trading. After the start of the stock exchange, the share lost more than 30 percent and was only 16.02 euros in the morning. The papers were among the big winners this year: they had risen by more than 130 percent from the record low in October 2022 at EUR 10.25.
wind power division has been causing problems for years
At Siemens Energy, fundamental questions have been asked for a long time about how to proceed with the problem child from Spain. “The main assumptions underlying the business plans are checked,” it said yesterday. Some experts are already questioning whether Siemens Gamesa is even capable of restructuring. Bruch, however, relies on wind power and the restructuring of Siemens Gamesa: “The success of the wind business remains the basic requirement for us to become a profitable market leader in the field of energy transition,” says the managing director of Siemens Energy.
Siemens Gamesa, one of the world’s largest manufacturers of wind turbines, has kept the group in suspense for years. Because the integration of the Siemens wind power division and the competitor Gamesa, from whose merger Siemens Gamesa was created, failed. Several changes at the top of Siemens Gamesa’s board of directors have also not been successful so far, and the Spaniards Siemens Energy have repeatedly put a spanner in the works. After all, the reorganizer Jochen Eickholt, sent from Munich, should clean up at Gamesa and stabilize the Spanish company. But the wind is blowing in his face too.