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The German government has decided to grant a EUR-7.5-billion (USD 8.04bn) guarantee to Siemens Energy AG (ETR:ENR) amid problems in its wind business that led to the company reporting a net annual loss of EUR 4.59 billion today.
The government support is part of EUR 15 billion in guarantee lines agreed by Siemens Energy with private banks and other stakeholders.
More specifically, private banks are granting a EUR-12-billion guarantee line, while a further EUR 3 billion will come from other stakeholders. The federal government’s involvement will underwrite a big chunk of those lines.
The company noted that the guarantees agreement followed “constructive and intensive talks.” It recently informed it was holding such discussions. Given the long project durations in the energy sector, the guarantees are intended to secure Siemens Energy’s order growth in crucial projects for the energy transition.
At the same time, Siemens Energy is selling 18% of its holding in Siemens Limited, India (SIL) to Siemens AG for about EUR 2.1 billion, accelerating the unbundling of Siemens Energy and Siemens AG in India.
FINANCIAL PERFORMANCE
On its performance in the fiscal year through September 2023, Siemens Energy said the good showing of the majority of its businesses was overshadowed by the wind business. The company also said that to achieve a turnaround, it is currently reviewing the scope of Siemens Gamesa’s activities, with more details to be provided on the Capital Market Day scheduled for November 21.
In the 2023 financial year, Siemens Gamesa was hit by charges for quality issues in the onshore business, higher product costs and ramp-up difficulties in the offshore business.
According to the announcement, the technical analysis of the quality issues at the wind subsidiary is almost complete and so far confirms previous findings. No new provisions have been made after the third-quarter announcement, the company said.
Siemens Gamesa is now expected to achieve break-even in fiscal year 2026.
Details of the performance of Siemens Gamesa are in the table below:
| EUR millions | Q4 FY 2023 | Q4 FY 2022 | FY 2023 | FY 2022 |
| Orders | 4,226 | 4,405 | 16,836 | 11,598 |
| Revenue | 2,592 | 3,372 | 9,092 | 9,814 |
| Profit | (670) | 334 | – | – |
| Profit margin | (25.8)% | 9.9% | – | – |
| Profit before special items | (664) | 374 | (4,347) | (617) |
| Profit margin before special items | (25.6)% | 11.1% | (47.8)% | (6.3)% |
In the fourth quarter, orders grew slightly, driven by the offshore and service businesses, including a large order in Taiwan. Onshore orders declined due in part to a sales halt for some onshore platforms because of the quality issues. In addition, a year ago there was a positive effect from the sale of the wind farm development portfolio in Southern Europe. The lower fourth-quarter revenue reflects the quality issues in the onshore business and factory load plan changes in the offshore business.
In the full year, Siemens Energy’s profit before special items moved to negative EUR 2.78 billion from positive EUR 225 million. Accordingly, the net loss for the full fiscal year expanded to EUR 4.59 billion from EUR 712 million a year back.
(EUR 1 = USD 1.072)
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