Share price collapses
Crisis company Siemens Energy needs help from the state
October 26, 2023, 3:12 p.m
The financially troubled energy technology group Siemens Energy is negotiating with the federal government about guarantees for its major projects. In view of the crisis at the wind turbine subsidiary Gamesa, the company fears difficulties with the banks.
The troubled company Siemens Energy is calling on the state because of the problems in its wind power business. The company, which is struggling with billions in losses, confirmed discussions with the federal government about state guarantees. Siemens Energy said the group is holding preliminary discussions with various parties, including partner banks and the federal government, to ensure access to guarantees for large orders. There is an increasing need for guarantees, particularly due to the increasing orders from the former gas and power business units.
A decision has not yet been made. “The federal government is in close and trusting discussions with the company,” said a spokesman for the Federal Ministry of Economics, but did not give any details. On the stock exchange, the news caused the price of Siemens Energy shares to fall by more than 30 percent at times. The shares of the Siemens Group, which still has a blocking minority of 25.1 percent in the energy technology group, lost around five percent.
Siemens Energy is seeking guarantees of up to 15 billion euros, reports “WirtschaftsWoche”. Because of the crisis at the wind turbine subsidiary Siemens Gamesa, the group fears difficulties in discussions with banks about guarantees for large projects. In industry, it is common for companies to have to secure their services with credit lines from banks for such projects that last for years.
Discontent in the federal government
According to the report, the federal government will be responsible for 80 percent of the first guarantee tranche of ten billion euros, with the banks taking over the remaining 20 percent. A second tranche of five billion euros should be guaranteed by the former parent Siemens AG, which still holds 25.1 percent of the shares after Siemens Energy went public. While Berlin is apparently fundamentally willing to support the company, which is important for the energy transition, Siemens does not want to be held responsible again, it was said in “Spiegel”. The federal government is upset about this attitude.
Siemens AG retained a share in Siemens Energy with reference to the billions in guarantees and financing for major energy projects. However, these obligations were reduced more quickly than expected, said CFO Ralf Thomas. This is also why the AG was able to reduce its shareholding from initially 35.1 percent – and wants to reduce it further. The company declined to comment on Siemens Energy’s discussions.
Details could follow in November
Siemens Gamesa has been making high losses for years, which have repeatedly ruined the balance sheet of the entire Siemens Energy group. Top managers were replaced several times – without success. Gamesa is the world’s largest manufacturer of offshore wind turbines. Recently there had been problems with damage to wind turbine rotor blades and bearings. Siemens Energy CEO Christian Bruch had announced that the company was keeping all options open when restructuring Gamesa. According to insiders, details could be presented in November at the annual press conference and the capital markets day.
Siemens Energy had declared that it would slip into the red by around 4.5 billion euros in the 2022/23 financial year (at the end of September) due to the problems at Siemens Gamesa. An insider said that the burden on the wind power business could be higher than the estimated 1.6 billion euros.
Siemens Energy emphasized that the group’s financial results for 2023 were within the forecast. While the former gas and power businesses were running smoothly, order intake and sales in the wind business in 2024 are expected to be below market expectations. “For the time being, Siemens Gamesa is not concluding any new contracts for certain onshore platforms and is only accepting orders selectively in the offshore business.”