The energy technology group Siemens Energy continues to suffer from its wind power subsidiary. For the past financial year, the DAX group reported a loss worth billions. It will probably take some time before the trend turns around.
High losses in the past financial year and the problems of the wind power subsidiary Siemens Gamesa are likely to burden Siemens Energy’s balance sheet for years to come. The company announced this today when it presented its balance sheet.
Loss multiplied in the financial year
In the past 2022/23 financial year, the parent company Siemens Energy incurred losses of 4.59 billion euros due to ongoing start-up problems and quality defects in wind turbines from Siemens Gamesa. This is a significant increase compared to the minus of 712 million euros last year.
According to Siemens Energy, the earnings targets were achieved or even exceeded in the group’s other divisions, such as high-voltage technology and industrial solutions. The group’s sales rose on a comparable basis by almost ten percent to 31.1 billion euros,
Because of the problems at Siemens Gamesa, the results at Siemens Energy are likely to be impacted for some time. According to the group, Gamesa will only reach the profit threshold in the 2025/26 financial year. For the current 2023/24 financial year, Gamesa is again expected to experience a loss of two billion euros.
The order books are full
The order situation for the entire group is quite good. Thanks to large orders for wind turbines and power grids, incoming orders even increased by a third to 350.4 billion euros. Siemens Energy recently reported an order backlog of 112 billion euros.
“In an extremely challenging year for Siemens Energy, two thirds of our businesses are growing profitably and have met or exceeded their annual targets,” emphasized CEO Christian Bruch. Things are different in the wind business. “All efforts here are focused on reducing costs, selecting contracts and increasing productivity, while we work in parallel to resolve the problems.”
Aid package put together
In order to secure the group’s financial needs on the way to profitability, Siemens Energy receives guarantees worth billions. A banking consortium guarantees eleven billion euros, 7.5 billion of which is secured by the state, as the Federal Ministry of Economics confirmed yesterday.
A further three billion euros in guarantees are to be obtained abroad. The Spanish government has already signaled support. The former parent company Siemens is formally responsible for the first billion in possible failures.
Sales proceeds should enable the company to stay in the black
For these commitments, Siemens obtained security from the now independent company Siemens Energy. This includes around a five percent share in the joint Indian subsidiary Siemens Ltd. Siemens Energy sells 18 percent of the Indian company directly to Siemens. The industrial group is transferring 2.1 billion euros for this, 15 percent less than the share package is worth on the stock exchange.
Thanks to the financial aid and sales proceeds, Siemens Energy is hoping for a profit of around one billion euros in the current financial year. However, the operating result could remain in the red again due to the ongoing losses at Siemens Gamesa.
Stock is recovering slowly
The shares of Siemens Energy, which are listed in the DAX, had lost around 70 percent of their value since the summer after the problems at the wind power subsidiary became known, and the share price fell from around 25 to seven euros.
After the financial aid for the company was decided, the paper rose again to around ten euros.