No, Siemens Is Not Exiting Wind Power – But Will Cut About €400 Million In Costs
Siemens Energy, a major player in the green energy sector, has announced plans to implement €400 million ($438 million) in cost cuts within its struggling wind turbine business.
Following significant losses, the company recently secured a €15 billion ($16.4 billion) government-backed bailout to address a €112 billion ($123 billion) backlog of stalled projects. Siemens Energy’s CEO, Christian Bruch, affirmed the company’s commitment to streamlining operations at an investor day in Hamburg, pledging to break even next year.
The strategic overhaul involves outsourcing production for key turbine components, narrowing international focus, and renegotiating unfavorable contract terms with customers.
The Dax-listed shares of Siemens Energy experienced a 6% decline, reaching €11.14. The company acknowledges the challenges in its wind division, Siemens Gamesa, which reported a €4.4 billion ($4.8 billion) loss this fiscal year, contributing to a €4.6 billion ($5 billion) group loss.
Despite the anticipated €2 billion ($2.1 billion) in additional losses in 2024, Siemens Energy is confident in implementing a comprehensive three-year plan to revitalize the wind division.
Jochen Eickholt, head of Gamesa, disclosed that technical issues with turbines were identified over a year ago, but the full extent only became apparent this summer. Siemens Energy has been diligently analyzing the problem, with a task force and external experts, estimating that approximately 2,900 out of 65,000 installed turbines may be affected.
Beyond technical challenges, the company recognizes that growth-focused strategies led to unfavorable contracts, prompting a shift towards a smaller “core” market for onshore wind turbines in countries with favorable regulations and incentives.
Information for this story was found via the Financial Times, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
