For investors and stock market analysts, it had become a sad routine at some point over the course of the quarters and annual balance sheets: Siemens Energy had to issue profit warnings again and again because of the problems in the wind business of its subsidiary Siemens Gamesa, there were always new problems, and each time the share price fell from Siemens Energy even more. The energy technology group, which was spun off from Siemens three years ago, lost billions in the future business with wind turbines. For the 2022/23 financial year alone, the company expects a loss of 4.5 billion euros due to the problems with wind power.
It is now clear: Because of the drastic quality deficiencies in its wind turbines, the company may need massive help from the state, also in order to be able to continue in other business areas such as the construction of power grids and power plants. The board is “currently examining various measures to strengthen Siemens Energy’s balance sheet” and is conducting “preliminary discussions with various parties, including Siemens Energy’s partner banks and the federal government, to ensure access to a growing volume of guarantees,” the company said.
The Ministry of Economic Affairs is “in close, trusting discussions”
The federal government was confident that a solution would be found that would enable Siemens Energy to continue working. A spokeswoman for the Ministry of Economic Affairs said that they were “in close, trusting discussions” with the company. In government circles it was also said that they wanted to “send a signal of confidence to the financial markets”. However, the prerequisite for the state to ultimately step in with a guarantee worth billions is that the Siemens Group, as the former parent company, also contributes a significant amount to the aid program. Negotiations on this are also ongoing.
The situation is dramatic because without billions in aid, the DAX group can hardly sign contracts for new major orders. Projects such as large power grids are designed to last many years. In order to complete them, companies such as Siemens Energy have to provide guarantees. These guarantees worth billions are usually guaranteed by the company’s bank. However, this is where things currently seem to be going wrong because of the high losses at Siemens Energy – individual deals could soon be on the rocks without guarantees.
After the Düsseldorf gas trader Uniper, this would be another action in which the federal government would have to come to the aid of a large corporation. Uniper got into serious difficulties as a result of Russia’s war of aggression against Ukraine. In order to maintain business operations, the federal government had to set up a rescue package worth billions and has held 99 percent of the company’s shares since then.
However, there is no talk of state entry in the case of Siemens Energy. Since the IPO, parent company Siemens has held the majority of the company with 25.1 percent of the shares. Siemens took over the Spanish wind energy producer Gamesa in 2017; Three years later, Siemens spun off its energy business under the name Siemens Energy – including Gamesa. Today, Siemens Energy shares lost more than 30 percent.