Siemens Gamesa faces financial strain from faulty wind turbines and challenges posed by competitive Chinese pricing, potentially leading to imminent layoffs.
Key Takeaways: Siemens Gamesa is a producer of wind turbines and is encountering significant challenges in its operations.The company incurred substantial losses due to faulty turbines, totaling a significant amount of money.
Chinese Competition: Siemens Gamesa is grappling with intense competition from Chinese manufacturers, who offer more competitive prices in the wind turbine market. In light of the fierce competition and pricing dynamics, Siemens Gamesa is currently facing a difficult business environment, raising concerns about its overall performance.
Siemens Energy revealed on Wednesday that it is undertaking a comprehensive review of the structure of Siemens Gamesa, a crucial step aimed at revitalizing the struggling wind division, which contributed to the company’s recent annual net loss of 4.6 billion euros ($5.0 billion).
In an effort to address financial concerns, Siemens Energy recently secured a 12 billion euro credit line, partially backed by the German government, alleviating fears among investors about potential business losses due to insufficient funds.
Siemens Energy, recognized for its production of essential equipment such as gas turbines, converter stations, and wind turbines, holds a pivotal role in Germany’s transition from fossil fuels to renewables.
Despite challenges, Siemens Energy has refrained from making additional provisions for faulty onshore turbine platforms following a thorough analysis of its fleet. CEO Christian Bruch expressed confidence in the findings, stating, “Our strong balance sheet remains a top priority, and Siemens Energy’s vital role in the energy transition will continue to drive our growth and success in the years ahead.”
As part of its ongoing efforts, Siemens Energy will review the “scope of Siemens Gamesa’s activities,” encompassing the manufacturing of blades and turbines. Detailed information regarding this review is anticipated to be disclosed during the company’s capital markets day on November 21.
Sources have indicated that Siemens Energy is considering strategic measures such as potential factory closures, sales office shutdowns, and outsourcing of production components to third parties. However, CEO Christian Bruch clarified that there are currently no concrete plans for job cuts or factory closures in Spain.
Furthermore, discussions are underway regarding the potential sale of specific business segments. Siemens Gamesa, once considered a growth driver for Siemens Energy, has faced setbacks due to wind turbine quality issues disclosed in June, resulting in a delay in breaking even until the 2026 fiscal year.
Siemens Energy remains optimistic about its future, and CFO Maria Ferraro mentioned that the company has various options to strengthen its balance sheet, addressing potential capital raises if needed.
