Ailing energy technology company Siemens Energy plans to slash costs in its loss-making wind power business with a major reorganization, the company announced on Tuesday.
The restructuring of wind turbine subsidiary Siemens Gamesa should save the troubled firm around €400 million ($438 million) by fiscal year 2025-26, Siemens Energy executives told investors at an event in Hamburg.
Siemens Energy chief executive Christian Bruch announced last week that Siemens Gamesa should break even this year, two years later than originally planned.
Trouble in the wind power business led the Munich-based Siemens Energy to report billions of euros in losses over the past financial year. The rest of the gas, grids and industrial transformation business is doing much better.
The Gamesa subsidiary has been struggling with chronic quality problems on its land-based wind turbines, start-up difficulties with offshore marine wind turbines as well as significantly higher costs.
Sales of the new 5.X land turbine have been suspended and the company is concentrating on ramping up production at its offshore turbine factories.
The company said it would be more selective in accepting orders, with company executives warning investors that it now anticipates fewer orders overall in the wind division.
The Gamesa subsidiary plans to concentrate on certain regions and products. Gamesa boss Jochen Eickholt said the firm’s core market is Europe.
Siemens Energy was previously a division of German engineering and manufacturing giant Siemens, but was spun off into an independent company in 2020. Siemens continues to hold a minority stake in the energy firm.
Siemens Energy said the company expects to record another huge loss in the current fiscal year.
Bruch, when announcing new three-year financial targets for Siemens Energy last week, said the company is prioritizing a turnaround at Gamesa.
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Bruch said the company’s overall profitability should also be boosted by the grid technology and industrial transformation businesses.
Siemens Energy has a huge order backlog. However, the company said that it needs money in the form of guarantees to be able to work through this backlog.
Last week, Siemens Energy reached an agreement with banks and the federal government on guarantees to secure orders. Germany’s government is offering a guarantee of €7.5 billion to secure bank guarantee lines of €12 billion.
