Munich Even before he officially took office as head of the troubled wind power specialist Gamesa, Jochen Eickholt had visited its plants in Denmark, Portugal and Spain in the past few days. “We will set the course for profitable growth,” explained Eickholt afterwards. He is confident that the mission will succeed. His predecessor Andreas Nauen, who will be in office until the end of the month, led the way through the plants in Brande and Aalborg.
The Dax group Siemens Energy is sending the previous board of directors to Madrid as CEO on March 1 to get the crisis subsidiary under control. Eickholt is committed to success. Before the general meeting, investors increase the pressure on the Siemens Energy management. They finally want improvement in the loss-making business with renewable energies and are demanding the takeover and full integration of Gamesas.
“I’m totally at the end of my patience,” said Daniela Bergdolt, Vice President of the German Association for the Protection of Securities, the Handelsblatt. The constant exchange of information between Gamesa’s management is “almost a sign of helplessness”. The new attempt must succeed. “Siemens Energy boss Christian Bruch is fully responsible.”
After another profit warning, the Dax group had again occupied the top position of the wind power subsidiary. Now there are no more excuses. The posting of Eickholt is one of the last means for Bruch, according to those close to him. If this doesn’t help either, the pressure on him will increase despite all the progress made in other areas.
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In the supervisory board circles of Siemens Energy, it was said that CEO Bruch had the full trust of the supervisory body. Chairman of the Supervisory Board Joe Kaeser will praise the management at the Annual General Meeting on February 24, according to a previously published speech: “A lot has been achieved.” One can be very satisfied with the development of the “Gas and Power” power plant division, which has long had low margins. Here progress was faster than planned.
However, Kaeser calls the business development at Siemens Gamesa unsatisfactory. Eickholt’s appointment addresses “the need for operational improvement and consistent management”. “This is a first step in the realignment of an important future field of a modern energy company.”
“Fix it, sell it or close it”
In the environment of the supervisory board it is said that everyone knows that the posting of Eickholt, who is valued by everyone as a “troubleshooter” and also feared by some because of his impatience, must sting: “The operational problem must be solved.”
Many trust the new CEO to turn the business around. “Anyone who managed to fix Siemens’ ailing train business in the past will also turn the tide in what is actually a booming wind market,” says Andreas Foeller, founder of the Comites recruitment consultancy.
Without a timely improvement, only radical steps remain. “Fix it, sell it or close it,” said shareholder representative Bergdolt, citing a saying by former GE boss Jack Welch – Siemens Gamesa must be restructured, sold or closed. The preferred variant of most investors is a complete purchase of the subsidiary. A crackdown on the listed subsidiary has so far only been possible for Siemens Energy via the board of directors.
“Siemens Energy must finally take over and integrate Siemens Gamesa completely,” demanded Vera Diehl, portfolio manager at Union Investment, at the Annual General Meeting. A “detailed restructuring plan with milestones” is also necessary, said Diehl.
Siemens Gamesa must get the project risks in onshore wind under control “so that the profit warnings finally stop and the slide in Siemens Energy’s share price is stopped”. A cash offer for the outside 33 percent would be a tour de force for Siemens Energy. Analysts therefore expect a takeover through a share swap. A solution could possibly be presented before the capital market day in May.
Due to the majority stake, problems at Siemens Gamesa impact directly on the parent company. In the first quarter of the 2021/22 fiscal year, which ended on September 30, Siemens Energy posted a net loss of EUR 240 million after a profit of EUR 99 million in the same period of the previous year. The Dax group had to lower its forecast for the year.
Fast might not be fast enough
According to a speech excerpt published in advance, Siemens Energy boss Bruch admits home-made problems at the annual general meeting. The market environment is and will remain difficult: “Nevertheless, we have to state that internal problems continue to weigh on the result.” Eickholt is a “proven expert when it comes to the restructuring of companies in difficult situations”.
He is firmly convinced that the wind market is intact, says Bruch. “All parameters are positive.” The results in the offshore segment with the wind turbines at sea and in the service business are good. Measures have been initiated for onshore. “These will naturally take time in the project business.”
Most people at Siemens Energy agree that the business will not turn around as quickly as the capital markets are hoping. The dilemma: Even if Eickholt lives up to its reputation as a quick pusher, it could still be too slow for investors.
Chairman of the Supervisory Board Kaeser asks for patience in his own way. Siemens Energy learned a lot in the first year of independence – including that “the development of a new company takes time and patience”. This is particularly true when it comes to what is probably the biggest restructuring of the energy industry of all time. “Because real transformations hurt before they shine.”
More: Siemens manages a dream start to the new fiscal year