[1/3]Siemens Energy CEO Christian Bruch addresses the annual results press conference in Munich, Germany, November 15, 2023. REUTERS/Leo Simon Obtaining licensing rights
MUNICH (Reuters) – Siemens Energy (ENR1n.DE) said on Wednesday it was reviewing the structure of Siemens Gamesa in an attempt to turn around its faltering wind energy division that caused an annual net loss of 4.6 billion euros ($5.0 billion). To benefit the group.
Siemens Energy on Tuesday secured a 12 billion euro line of credit from private banks with partial support from the German government, alleviating a major concern among investors who feared the group would lose business without the funds.
Siemens Energy is a producer of key equipment such as gas turbines, converter stations and wind turbines, and is considered vital by the German government for the energy transition from fossil fuels to renewables.
The group, which was spun off from Siemens AG (SIEGn.DE) in 2020, said it had not made any further provisions for faulty onshore turbine platforms after analyzing its fleet. In August, it allocated €1.6 billion to address this problem.
“I am encouraged that the data from the installed onshore turbines confirm our previous findings,” said Christian Bruch, CEO of the company.
“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.”
Frankfurt-listed Siemens Energy shares rose 5.8 percent by 0907 GMT.
Siemens Energy said it would review Siemens Gamesa’s “scope of activities”, which includes blade and turbine manufacturing, adding that more details about what this means will be revealed at the group’s capital markets day on 21 November.
Sources told Reuters last month that the group was considering closing factories and sales offices, as well as outsourcing the production of some components to third parties.
Bruch said there are no concrete plans to cut jobs or close factories in Spain yet.
He added that there are also ongoing discussions about selling parts of the company that sell a single product to a specific market, but did not provide specific details.
Siemens Gamesa, once seen as Siemens Energy’s future growth engine, has become a millstone around the group’s neck after deeper-than-expected problems with the quality of wind turbines were revealed in June.
The division, created in 2017 through the merger of Siemens AG’s wind energy businesses and Spain’s Gamesa, is now only expected to break even in fiscal 2026, two years later than previously envisaged, Siemens Energy said.
In 2024, it is expected to record an operating loss of $2 billion.
As part of the financial support agreed with stakeholders, Siemens Energy said it would sell an 18% stake in Siemens India Limited (SIEM.NS) to Siemens at a 15% discount, confirming an earlier Reuters story.
Asked about the potential need to raise capital, Chief Financial Officer Maria Ferraro said Siemens Energy had several options to strengthen its balance sheet.
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Reported by Christoph Stetz. Edited by Linda Pasquini, Mark Potter and Jan Harvey
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