Siemens Energy reviews wind unit set-up after $5 bln loss - Reuters
Siemens Energy reviews wind unit set-up after $5 billion loss | Reuters
Siemens Energy reviews wind unit set-up after $5 billion loss
Miniatures of windmill, solar panel and electric pole are seen in front of Siemens Energy logo in this illustration taken January 17, 2023. REUTERS/Dado Ruvic/File Photo Acquire Licensing Rights
- Summary
- Companies
- No further provisions for faulty onshore turbine platforms
- Company to review the scope of Siemens Gamesa activities
- More details expected on Nov. 21 capital markets day
- Frankfurt-listed shares up 5.8%
MUNICH, Nov 15 (Reuters) - Siemens Energy (ENR1n.DE) is reviewing the structure of Siemens Gamesa, it said on Wednesday, in a bid to return the struggling wind division that caused a 4.6 billion euro ($5.0 billion) annual net loss for the group to profit.
Siemens Energy on Tuesday secured a 12 billion euro credit line from private banks that was partly backstopped by the German government, removing a major concern for investors that feared the group could lose out on business without the funds.
A producer of key equipment such as gas turbines, converter stations and wind turbines, Siemens Energy is viewed by the German government as vital to its energy transition from fossil fuels to renewables.
The group, which was spun off from Siemens AG (SIEGn.DE) in 2020, said it had made no further provisions for faulty onshore turbine platforms following an analysis of its fleet. In August, it set aside 1.6 billion euros to tackle the problem.
"I am encouraged that the data from the installed onshore turbines confirm our previous findings," CEO Christian Bruch said.
"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."
Frankfurt-listed shares in Siemens Energy were up 5.8% at 0907 GMT.
Siemens Energy said it would review the "scope of Siemens Gamesa's activities", which includes the manufacturing of blades and turbines, adding more details on what that meant would be revealed at the group's capital markets day on Nov. 21.
Sources told Reuters last month that the group was considering shutting factories and sales offices as well as outsourcing production of some components to third parties.
Bruch said there were no concrete plans for job cuts or factory closures in Spain as of now.
He said there were also discussions ongoing about selling parts of the company which sell one product to a particular market, but gave no concrete details.
Siemens Gamesa, once considered the future growth driver for Siemens Energy, has become a millstone around the group's neck after deeper-than-expected wind turbine quality issues were disclosed in June.
The division, created in 2017 through the merger of Siemens AG's wind business and Spain's Gamesa, is now only expected to break even in the 2026 fiscal year, Siemens Energy said, two years later than previously envisaged.
In 2024, it is expected to post a 2 billion operating loss.
As part of the financial backing agreed with stakeholders, Siemens Energy said it would sell an 18% stake in Indian firm Siemens Ltd (SIEM.NS) to Siemens AG at a discount of 15%, confirming a previous Reuters story.
Asked about the potential need for a capital raise, Chief Financial Officer Maria Ferraro said Siemens Energy had several options to strengthen its balance sheet.
($1 = 0.9189 euros)
Reporting by Christoph Steitz; Editing by Linda Pasquini, Mark Potter and Jan Harvey
Our Standards: The Thomson Reuters Trust Principles.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.