Siemens Energy reviews wind turbine business after $5 billion loss

By Christoph Steitz and Alexander Hübner

MUNICH (Reuters) -Siemens Energy may exit some markets and products of its struggling wind turbine business, it said on Wednesday, in a bid to return Siemens Gamesa to profit after it triggered the group’s 4.6-billion euro ($5.0-billion) annual net loss.

Siemens Energy on Tuesday secured a 12-billion euro credit line from private banks that was partly backstopped by the German government, removing a major concern for investors that feared the group could lose out on business without the funds.

A producer of key equipment such as gas turbines, converter stations and wind turbines, Siemens Energy is viewed by the German government as vital to its energy transition from fossil fuels to renewables.

But Siemens Gamesa, once considered the future growth driver for Siemens Energy, has become a millstone around the group’s neck after deeper-than-expected wind turbine quality issues were disclosed in June. The business is expected to post a 2 billion operating loss in 2024.

On Wednesday the parent company, spun off from Siemens AG in 2020, said it was making no further provisions for faulty onshore turbine platforms having set aside 1.6 billion euros in August to tackle the problem, but would review the “scope of Siemens Gamesa’s activities”, which includes the manufacturing of blades and turbines.

Further details on what that means will be given at the group’s capital markets day on Nov. 21, it said.

“Going forward, one has to absolutely ask the questions on what products are being offered in what markets,” Siemens Energy CEO Christian Bruch said. “There will be a need to focus more.”

Shares in Siemens Energy were up 6.4% at 1355 GMT on what analysts described as investor relief over the fact that issues at Siemens Gamesa had not worsened while the announced measures strengthened the company’s balance sheet.


“While the current situation is incredibly messy, we appear to be beyond the peak of losses and bad news,” Berenberg wrote in a note.

Bruch also said he felt encouraged that data from a review of Siemens Energy’s installed onshore wind turbines had produced no additional problems so far.

Siemens Gamesa, created in 2017 through the merger of Siemens AG’s wind business and Spain’s Gamesa, is only expected to break even in the 2026 fiscal year, Siemens Energy said, two years later than previously envisaged.

Sources told Reuters last month that Siemens Energy was considering shutting factories and sales offices at Siemens Gamesa as well as outsourcing production of some components to third parties.

Bruch said discussions were ongoing about selling parts of the company that sell one product to a particular market, but gave no concrete details.

Germany’s most powerful union IG Metall welcomed the agreement around financial guarantees for Siemens Energy, saying this would not have been possible without the intervention of German Chancellor Olaf Scholz and Economy Minister Robert Habeck.

As part of the backing agreed with stakeholders, Siemens Energy said it would sell an 18% stake in Indian firm Siemens Ltd to Siemens AG at a discount of 15%, confirming a previous Reuters story.

Asked about the potential need for a capital raising, Chief Financial Officer Maria Ferraro said the group had several options to strengthen its balance sheet.

($1 = 0.9209 euros)

(Reporting by Christoph Steitz and Alexander Huebner; Additional reporting by Matthias Williams, Tom Kaeckenhoff and Tristan Veyet; Editing by Jan Harvey, Elaine Hardcastle and Mark Potter)