Siemens vows to continue in wind despite €billions losses

The company lists a range of challenges, including unsustainable competition among wind turbine manufacturers that has resulted in low market pricing; increased costs of raw materials and logistics; inadequate market-standard terms and conditions that have forced manufacturers to take risks and prevented them from passing costs on to customers; rapid development cycles among manufacturers affecting quality; and the rapid growth of offshore demand posing operational challenges in ramping up production simultaneously in multiple locations.

To enable the company to work through a massive €112 billion project backlog it has had to secure €15 billion in loans, half of which (€7.5 billion) has been backed by the German government in the form of guarantees. The rest has been approved by the banking sector.

Insisting the money was not a loan but a guarantee, Bruch admitted the situation was ‘very painful’ and that the company would be more selective about the projects it would bid for.

“Revenue increased by approximately 10% in all divisions – gas services, grid technologies, transformation of industry – except for wind,” he said. “Profitability has been impaired by the enormous loss of Siemens Gamesa, which led to a €4.588 billion net loss. This result is of course a massive disappointment but with focus and discipline we have to work on making our wind business profitable and restructure it.”

The company’s original forecast that it would break even next year, 2024, has been put back to 2026 he said.

Speaking to Maritime Journal, Veronica Diaz, press officer for Wind Power, reiterated CEO Christian Bruch’s comments that the energy transition would not be possible without wind.

“Our CEO always repeats the same message,” she said. “The fact that we need help from the government to secure funding is a signal of how big our order backlog is.”

Most of the €112 billion backlog is for grid work, she said, with €42 billion belonging to Siemens Gamesa, including €19 billion in service work and €22 billion from on and offshore wind. She could not give a further breakdown.

The guarantee was given shortly before a court in Germany overruled a €60 billion hand-out for ‘net zero’ policies, claiming it would be unconstitutional. The ruling has severely rocked the stability of the German government.

Diaz confirmed that Siemens Energy’s guarantees were not part of the €60 billion package.