Source: Energy & Management Powernews, May 12, 2022
The future belongs to renewables, but they can spoil the current business. Siemens Energy is in the red because of the permanent weakness of its wind power subsidiary Gamesa.
The Spanish wind power subsidiary Siemens Gamesa Renewable Energy remains the Achilles heel of the parent company. Siemens Energy slips through its losses in the second quarter, which ended at the Munich-based company at the end of March, with 252 million euros in the red after taxes. A year ago, the profit for the corresponding period had been 31 million euros. Siemens Energy speaks in a statement of "once again disappointing results" at Siemens Gamesa.
Also under the influence of the Russian war of aggression on Ukraine as well as the Covid uncertainties in China, Siemens Energy now looks even more cautiously at the entire fiscal year 2022. More than minus 2% to plus 3% the group will probably not turn over, this is the lower end of the already downwardly corrected forecast. However, the result could be even worse, Siemens Energy said in a statement. The sobering interim results are also expressed in the (undiluted) earnings per share: The dividend is minus 22 cents (instead of plus 3 cents).
Siemens Gamesa records slump in orders received
A striking feature of Siemens Gamesa, in which Siemens Energy holds 67.1% of the shares, is the manageably full order book. In the comparable quarter of 2021, orders totaling 5.5 billion euros had still been received; the current quarter shows only 1.2 billion euros - a nominal decline of 78.2%. Sales slumped by 6.8% in nominal terms to around €2.2 billion. Siemens Energy blamed this on operational problems with the startup of the onshore 5.X platform and with the supply chains for wind turbines.
The difficulties at the Siemens Gamesa subsidiary are structural in nature, and the lean period has already spanned four quarters in a row. The wind power developer urgently needs to find answers in almost all segments of its business. Christian Bruch, head of Siemens Energy, sees the situation at Siemens Gamesa as "further aggravated compared to the profit warning issued earlier. As majority shareholder, we are making our expertise available to get to the bottom of the causes and overcome the problems." The "expertise" has two names: Former board member Jochen Eickholt has led Siemens Gamesa since March, and he has been supported since the beginning of May by Tim Dawidowsky, who has moved up the management ranks.
In addition to the operational problems and low order volume in the wind power business, there is price pressure on energy, raw materials and in the transport sector. A recalculation of wind turbine projects increased the loss in value, and Siemens Gamesa now comes to an adjusted profit before taxes of minus €301 million (instead of plus €42 million).
The company rates the gas and power businesses, which Siemens Energy manages in its Gas and Power division, as "solid." Gas and Power reported a 29% increase in orders to 6.7 billion euros in the quarter. These figures lifted the overall group's order intake to €7.9 billion, despite the impact of Siemens Gamesa, which in total represents a decline of just over 27%. According to the company, the service business was particularly convincing here.
Author: Volker Stephan