Siemens Energy reports new losses in the renewable energy business

Siemens Gamesa

The German-Spanish turbine manufacturer is deep in crisis.

(Photo: Siemens Gamesa)

Munich After new bad news from the wind power subsidiary Gamesa, the Dax group Siemens Energy has received its earnings forecast for the current fiscal year. Instead of a significant reduction, a net loss at the previous year’s level is now expected, Siemens Energy announced on Thursday evening.

Once again the business with renewable energies is responsible for the problems, while the other sectors are doing better than expected. Siemens Gamesa reported an operating loss before special items of EUR 760 million for the first quarter of its 2022/23 fiscal year (ending September 30), also due to quality problems.

An inventory of the existing fleet resulted in higher charges for guarantees and service due to unexpectedly high failure rates for certain components. The turnover was two billion euros.

Siemens Gamesa has been in crisis for years. Again and again, the wind power group surprised the parent company in Munich with forecasts revised downwards and new burdens. In the past fiscal year, Siemens Gamesa made a net loss of almost one billion euros.

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In order to be able to take better action, Siemens Energy decided to fully integrate the subsidiary. With the help of a multi-billion takeover bid, Siemens Energy secured 93 percent of the shares and decided to take the company private.

Siemens Energy wants more crackdown on the crisis subsidiary

The current losses are the result of the inventory by the new Gamesa boss Jochen Eickholt, who was sent from Munich to Madrid last year as a reorganizer. Because of his impatience, he is known internally as “Two-Week Jochen”.

A spokesman for Siemens Energy said with regard to Gamesa that the situation in the operational areas was improving. “However, the old contracts in particular require the unrestricted attention of management given the difficult conditions in the procurement market.” The withdrawal from the stock exchange enables the company to concentrate fully on solving operational problems.

Red numbers


Million Euros

Siemens Energie reported a loss after the first quarter of its 2022/23 fiscal year.

The troubles at Siemens Gamesa regularly masked progress in other Siemens Energy businesses. In the first quarter of 2022/23 – i.e. from October to December – the divisions “Gas Services” with the power plants, “Grid Technologies” with the networks and “Transformation of Industry” with the hydrogen activities were able to improve their operating results.

The entire group achieved sales of seven billion euros in the first quarter. Analysts had expected an average of 6.6 billion euros. The loss was 384 million euros, here the consensus was a minus of only 32 million euros.

The three other business areas, which at that time were still combined under the “Gas and Power” unit, had already held their ground well last year. Revenues were stable on a comparable basis at a good 19 billion euros. What’s more: incoming orders increased by a quarter to almost 27 billion euros. The adjusted operating return on sales was three percent, a solid figure.

“But of course it’s a setback”

But Gamesa’s red numbers dragged the entire group down. The sales of Siemens Energy therefore fell slightly in 2021/22 in the entire group to 29 billion euros. The bottom line was a loss of 647 million euros. Siemens Energy actually wanted to significantly reduce this. In terms of sales, the group continues to expect growth on a comparable basis of three to seven percent.

Jochen Eickholt

Eickholt has been the new boss of the wind company since March 1st.

(Photo: dpa)

In industry circles it was said that the quality problems at Gamesa mainly affected old projects. “But of course this is a setback,” said an industry insider. However, it was clear that Eickholt would turn every stone and that this clean-up work could also lead to new burdens.

Siemens Energy said the Mistral restructuring program is making progress towards stabilizing the business and returning to profitability. The new 5X platform, which had had problems starting up, was ahead of plan in terms of production and installations in the first quarter.

Siemens Energy’s problems had also weighed heavily on Siemens Energy’s share price. Since a high of 33 euros in early 2021, the price has collapsed by two thirds. In view of the forthcoming integration of Gamesa, however, investors drew hope. In the past few months, the price has risen from a good 10 to almost 19 euros.

More: Significantly more wind turbines were built in Europe in 2022

Handelsblatt energy briefing

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