After rescue deal, Siemens Energy unveils massive loss
FRANKFURT: Siemens Energy reported a 4.59-billion-euro ($5-billion) annual loss Wednesday, dragged down by a crisis in its wind power unit, a day after a government-backed rescue package was unveiled for the German group.
CUXHAVEN: (FILES) A worker stands next to rotor hubs of wind turbines at the Siemens Gamesa factory in Cuxhaven, northwestern Germany, on January 31, 2023, on the sidelines of the visit of the German Economy minister at the plant. Siemens Energy reported a 4.59-billion-euro (USD 5-billion) annual loss on November 15, 2023, dragged down by a crisis in its wind power unit, a day after a government-backed rescue package was unveiled for the German group. – AFP.
The company’s huge loss in the 2022-2023 financial year was far larger than a loss of several hundred million euros the year before.
While large parts of its wide range of businesses, such as those related to gas and power grids, were healthy, the results were hit by the crisis in its Gamesa wind power subsidiary. Gamesa has faced long-running technical problems with its onshore wind turbines, which have cost huge sums to fix.
“The wind business remains a major challenge and has led to the net loss in 2023,” said the company. Gamesa is only expected to break even in financial year 2026, and it will impact the group’s performance in the “near to mid-term,” it said. Still, Siemens Energy expects to return to a net profit of 1 billion euros next year.
Revenue in its past financial year rose 7 percent to 31 billion euros, and it said it expects to post similar growth the following year. Siemens Energy runs its financial year from October to September, and the annual results were announced a day after a 15-billion-euro, state-backed rescue deal was unveiled after weeks of talks.
The deal involves providing “guarantees” to Siemens Energy to allow it continue financing major long-term projects. The economy ministry announced it would grant the company 7.5 billion euros worth of guarantees, and others involved included private banks as well as the larger Siemens conglomerate, which is a major shareholder in Siemens Energy.
Siemens Energy was spun out of Siemens in 2020. In 2022, Siemens Energy spent 4 billion euros to take full control of Gamesa, which was already having difficulties. Siemens Energy shares jumped 8.8 percent Wednesday on the Frankfurt Stock Exchange but they remain down 35 percent for the year.
Sales, at 77.8 billion euros, increased 11 percent on the previous year. For 2024, however, the group expects revenue to grow in a range of between four and eight percent. This cautious assessment is mainly due to the “Digital Industries” division, whose work includes supplying technologies for automation.
After growing strongly in the past financial year, Siemens expects sales growth of just zero to three percent in this unit in 2024. The company said in a statement that it expected “destocking” in this area at the start of the financial year. However, in the second half of the year, “global demand in the automation businesses, especially in China, will pick up again,” it added.
Analysts were positive about the results, with Deutsche Bank saying in a note that Siemens “beat on all metrics” in its fourth quarter, and the 2024 outlook “confirms the group’s resilience and strong strategic positioning”. Its shares rose more than six percent on the Frankfurt Stock Exchange.
The Smart Infrastructure division, which deals with areas like data centres and battery makers, expects revenue growth in the coming year between seven and 10 percent, down on the previous year’s figure. The unit dealing with railways also expects sales growth to slide next year, and to come in between eight and 11 percent. – AFP.
