Siemens Energy, a leading energy company based in Munich, has announced that it is conducting a comprehensive review of its wind-turbine business in an effort to address challenges and bolster its financial position. Despite reporting excellent performance and success in 70% of its businesses, Siemens Energy faced difficulties in its wind division.
To facilitate a turnaround and restore profitability to its subsidiary Siemens Gamesa, the company is currently evaluating the scope of its activities. The onshore business’s quality issues, rising product costs, and offshore ramp-up challenges significantly impacted Siemens Energy’s results and will likely continue to affect profitability in the foreseeable future. Break-even for Siemens Gamesa is now expected by fiscal year 2026.
For the fourth quarter of the fiscal year, Siemens Energy recorded a net loss of 870 million euros ($946.5 million), compared to a profit of EUR354 million in the same period of the previous year. The net loss before special items was EUR487 million.
Revenue declined by 2.5% year-on-year to EUR8.52 billion, while orders decreased by 7.8% to EUR10.58 billion. This decline was primarily driven by a lower volume of large orders in the grid technologies segment and a high comparative basis from the prior year.
Looking ahead, Siemens Energy aims to achieve a net profit of up to EUR1 billion in fiscal year 2024, a significant improvement from the net loss of EUR4.59 billion projected for fiscal year 2023. The company anticipates the profit margin before special items to range between 1% and minus 2%, an improvement from the current fiscal year’s margin of minus 8.9%.
Siemens Energy also expects comparable revenue growth to reach between 3% and 7%, while pretax free cash flow is anticipated to be around negative EUR1 billion. Furthermore, the company forecasts proceeds of EUR2.5 billion to EUR3 billion from disposals and portfolio transformation.
By reviewing its wind-turbine business and implementing measures to strengthen its balance sheet, Siemens Energy is actively taking steps to overcome the challenges it has faced. The company remains committed to delivering strong results and maximizing value for its shareholders in the years to come.
Siemens Energy Secures EUR7.5 Billion in State Guarantees for Order Growth and Long-Term Projects
In a effort to support order growth and long-term projects, the German government has announced its decision to provide EUR7.5 billion of state guarantees to Siemens Energy. This move comes as part of a larger EUR15 billion rescue package that involves private banks and other stakeholders.
Siemens Energy, a leading manufacturer of wind farms and a key player in the energy transition, has stated that these guarantees are necessary to support its projects, given its current order backlog of EUR112 billion.
“We are thrilled to have found a viable solution with all parties involved to secure our energy transition-accelerated growth, following constructive discussions,” said Chief Executive Christian Bruch. He also emphasized that Siemens Energy’s strong balance sheet remains a top priority, and that the company’s pivotal role in the energy transition will continue to drive its growth and success in the coming years.
As part of the agreement, dividends and management bonuses will be temporarily suspended for the duration of the guarantees.
Additionally, Siemens Energy has reached an agreement to sell an 18% stake in Siemens India to its former parent company Siemens, which spun off Siemens Energy in 2020 and now retains a minority stake in the company. The proceeds from this sale are estimated to amount to around EUR2.1 billion. It is important to note that the purchase price reflects a customary discount of 15%, and no new guarantees will be provided by Siemens to Siemens Energy. Currently, Siemens Energy holds a 24% stake in the listed Indian affiliate, while Siemens holds a majority stake of 51%.
Further updates on the business, including mid-term targets and strategic decisions for Siemens Gamesa, will be provided at the upcoming capital markets day next week.
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