Siemens Energy has announced the highest loss in its history, blamed on problems in the wind power business. Things are actually going well in the rest of the group.
After the guarantee comes the record loss: Siemens Energy made a loss of 4.6 billion euros in the past financial year, as the group announced. This is by far the biggest loss in the energy technology group’s short history. The cause is the problems in the wind power business, which regularly wreak havoc on Energy’s balance sheet and which reached a peak in the last financial year.
Although they continue to press, the Munich-based company expects a profit of one billion euros in the 2024 financial year, which has been running since October, thanks to sales. Without the sales, a loss of between 1 and 1.5 billion euros would be expected.
There should be no exit from wind energy
However, the wind power business will continue to accumulate losses in 2024: before special effects, the group expects a loss of around two billion euros. The wind sector will not be profitable until 2026. A focus on profitable markets and a slower rate of introduction of new products should also contribute to this, as CEO Christian Bruch said. You have to ask yourself how many markets you actually need to be in, he said. According to his statements, Europe and the USA are likely to be considered set.
The entire wind power industry is suffering from growing pains that have been underestimated, Bruch explained the dilemma that no profits are being made despite high demand. At Siemens Energy, there are also expensive quality problems with some types of systems. However, Bruch is currently ruling out an exit from wind power.
IG Metall called on management to soon show a perspective for the wind business. “This is the only way the company and its employees will be able to get back into calmer waters and realize their great potential as part of the energy transition,” explained second chairman Jürgen Kerner. He praised the state guarantee and Siemens’ commitment.
Energy’s remaining businesses are performing solidly. However, they cannot compensate for the losses in the wind sector. “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 Bruch.
Despite this, demand for Siemens Energy’s products remains high. In the past financial year, incoming orders were a good 50 billion euros, around a third higher than in 2022. The order backlog grew by a good seventh to 112 billion. Sales increased around 10 percent to 31.1 billion euros.
“Significantly accelerated growth”
“The current high demand for our products also brings with it challenges,” said Bruch. “We are therefore pleased that, after very constructive discussions, we have found a good solution with everyone involved to ensure our growth, which has been greatly accelerated by the energy transition.”
On Tuesday, the Federal Ministry of Economics reported a breakthrough in the struggle for guarantees for Siemens Energy. The core is a federal government guarantee of 7.5 billion euros. The former parent company Siemens, private banks and other players are also on board. In total it’s about 15 billion. 12 billion of this comes from the package with the federal government, banks and Siemens. Another 3 billion should come from the other players. These include countries like Spain and the EU, as Bruch said.
In addition, Siemens Energy will sell 18 percent of the Indian company Siemens Limited to Siemens. So far, Energy still holds 24 percent of it as a result of its spin-off from the Siemens Group in 2020. The proceeds are expected to be around 2.1 billion euros. As a result, the separation of the businesses into separate companies will also be accelerated.
The stock market reacted positively to the current situation at Siemens Energy. The share, which had lost massively in value so far this year, was up sharply on Wednesday morning and was one of the biggest winners in the DAX.
notice
Source: Stern
