Siemens Energy
Siemens offshore

Siemens Energy Faces Restructuring

Nov. 17, 2023
Quality control issues with wind turbines resulted in a $5-billion annual loss for that segment, and a new commitment to evaluate future products and areas of activity.

Siemens Energy is set to restructure its wind turbine business to address that segment’s €4.6-billion ($5.0 billion) annual net loss for 2023, and the manufacturer is indicating it may exit some market segments where it cannot be competitive. In particular, it has incurred charges for “quality issues in the onshore business, increased product costs, and ramp-up challenges in the offshore business (which) severely impacted the results for the fiscal year 2023 and will continue to impact the group's profitability in the near to mid-term.”

Siemens Energy was formed in a spinoff of Siemens AG’s energy division in 2020. It produces industrial gas turbines, converter stations, and wind turbines for offshore and onshore installations.

As it moves to correct the organizational problems, Siemens Energy has secured €15 billion ($16.3 billion) in loans from private lenders, with half that amount backed by loan guarantees from the German government. Germany reportedly views Siemens Energy to be an essential ally in its effort to transition from fossil fuels to renewable sources of energy.

"Going forward, one has to absolutely ask the questions on what products are being offered in what markets," according to Siemens Energy CEO Christian Bruch. "There will be a need to focus more."

The onshore wind segment has drawn the most focus for its unresolved quality issues; last August Siemens Energy committed €1.6 billion ($1.75 billion) to address those matters. Now, however, it is making no further provisions for those problems – and instead will focus its attention on the full range of Siemens Gamesa’s activities.

The focus of attention now is on its subsidiary Siemens Gamesa, the wind-turbine manufacturer that was formed in 2017 by a merger of Siemens AG’s wind energy business and a Spanish business specialized in wind turbine systems.

Some options for reorganization may include closing manufacturing sites where Siemens Gamesa manufactures wind turbine blades and other components, and outsourcing component production to contract suppliers.

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