By Giulia Petroni
Siemens Energy is reviewing the structure of its troubled wind-turbine business and taking measures to strengthen the group’s balance sheet after swinging to a net loss in its fiscal year.
“In a year with challenges, the excellent performance and success of 70% of Siemens Energy’s businesses was offset by difficulties in the wind business,” the Munich-based company said on Wednesday. “To help achieve the turnaround, and return Siemens Gamesa to profitability, the scope of Siemens Gamesa’s activities is currently reviewed.”
The company said the unit’s quality issues in the onshore business, increased product costs and ramp-up challenges in offshore had a severe impact on results and are set to continue hitting profitability in the near-to-mid term. Break-even at Siemens Gamesa is now expected in fiscal 2026.
Siemens Energy reported a net loss of 870 million euros ($946.5 million) in the fourth quarter of its fiscal year, from a profit of EUR354 million in the year-earlier period. The net loss before special items amounted to EUR487 million.
Revenue fell 2.5% on year to EUR8.52 billion while orders decreased 7.8% to EUR10.58 billion, mainly due to a lower volume of large orders at its grid technologies segment and a high comparative basis in the previous year.
In fiscal 2024, Siemens Energy expects to swung to a net profit of up to EUR1 billion from a net loss of EUR4.59 billion in fiscal 2023. The profit margin before special items is expected between 1% and minus 2%, from minus 8.9% in the current fiscal year.
Comparable revenue growth is seen in a range of 3% and 7%, while pretax free cash flow should be around negative EUR1 billion. The company also said it expects proceeds in a range of EUR2.5 billion to EUR3 billion from disposals and portfolio transformation.
In order to support order growth and long-term projects, the German government agreed on Tuesday to provide EUR7.5 billion of state guarantees to the company as part of a EUR15 billion rescue package with private banks and other stakeholders.
Siemens Energy, a major manufacturer of wind farms and a key player in the energy transition, said it needs guarantees to support its projects as the current order backlog amounts to EUR112 billion.
“High demand for our products also brings challenges. We are therefore very glad that after very constructive discussions, we have now found a good solution with all parties to secure our energy transition-accelerated growth,” Chief Executive Christian Bruch said. “Our strong balance sheet remains a top priority, and Siemens Energy’s vital role in the energy transition will continue to drive our growth and success in the years ahead.”
Dividends and management bonuses will be suspended for the duration of guarantees.
Siemens Energy has also agreed to sell a 18% stake in Siemens India to former parent Siemens–which spun off Siemens Energy in 2020 and now retains a minority stake in the company– with proceeds amounting to around EUR2.1 billion.
The purchase price reflects a customary discount of 15%, Siemens said, adding it won’t provide new guarantees to Siemens Energy. Siemens Energy currently holds 24% of the listed Indian affiliate, while Siemens holds a 51% stake.
Further updates on business, including mid-term targets and strategic decisions for Siemens Gamesa, will be provided at the capital markets day next week.
Write to Giulia Petroni at [email protected]
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