Siemens Energy obtains record losses of 4,588 million in 2023 weighed down by Gamesa

The company expects to earn 1,000 million in 2024 and does not believe that Siemens Gamesa will reach the break-even point until 2026.

Siemens Energy obtains record losses of 4,588 million in 2023 weighed down by Gamesa

The company expects to earn 1,000 million in 2024 and does not believe that Siemens Gamesa will reach the break-even point until 2026


Siemens Energy shot up its net losses to a record figure of 4,588 million euros in its fiscal year 2023, which represents more than sixfold the 'red numbers' of 712 million euros from the previous year, impacted by the problems in its wind business and at Siemens Gamesa, the company reported.

These problems have led the group to reach an agreement this Tuesday for credit lines from the German Government, its parent company Siemens AG and the bank to come to the 'rescue' of the company and be able to support the strong growth in orders.

In the last financial year, Siemens Gamesa, a company that was delisted from the Stock Exchange at the end of 2022, already suffered losses of 940 million euros.

However, Siemens Energy indicated that the costs associated with quality problems in the onshore business (land wind), together with the increase in costs and challenges in expanding capacity in the offshore business (offshore wind) have seriously affected the results for fiscal year 2023 will continue to impact the group's profitability in the short and medium term.

In any case, the group highlighted that Siemens Gamesa's quality problems have already been defined, with a technical analysis of the quality problems in its 4.X and 5.X terrestrial platforms already almost completed, which has led to it not additional provisions had to be made to those of the third quarter due to this, and measures to change the course of the business continue.

However, it does not foresee that the wind turbine manufacturer will reach break-even until 2026 and, to return to profitability, "it is currently reviewing the scope of all its activities." In this regard, Siemens Energy indicated that it will provide "more details" at the Capital Markets Day that will be held on November 21.

Despite these negative figures, Siemens Energy's order book reached a new record at €112 billion, while orders exceeded the already high level of the previous year and increased by 33.8% in comparable terms, to 50.4 billion euros. Both Siemens Gamesa and Grid Technologies contributed strongly to this growth.

The president and CEO of Siemens Energy, Christian Bruch, highlighted that in a year "of unprecedented challenges", the company "has shown that it can turn the situation around, since all businesses, with the exception of wind, have met or exceeded its objectives for the year.

"We are also seeing progress in resolving Siemens Gamesa's issues, as data from installed onshore turbines confirms the conclusions we already announced. Maintaining a strong balance sheet remains a top priority. Siemens Energy's vital role in the energy transition will continue to drive our growth and success for years to come," he said.

The company's sales increased by 9.9% in comparable terms, up to 31.1 billion euros, and all segments, except Siemens Gamesa, favored this growth. The Gas Services, Grid Technologies and Transformation of Industry businesses exceeded their sales targets for the year, helping the company meet its forecasts.

Looking ahead to 2024, the group plans to leave losses behind and achieve a net profit of up to 1,000 million euros. It expects comparable sales growth - excluding the effect of currency translation and changes in the scope of the business portfolio - for the next fiscal year in a range of 3% to 7% and a profit margin before special items of between -2% and 1%.

Regarding the agreement for its 'rescue', he indicated that the German Government has agreed that it will guarantee 7.5 billion euros of a total amount of 12 billion euros of guarantees, of which 11 billion euros will be provided to Siemens Energy through a banking consortium.

In exchange, the federal government will receive a market-standard payment from Siemens Energy. The remaining €1 billion will be provided by an additional consortium led by Deutsche Bank.

In addition, Siemens Energy AG and Siemens AG have agreed on a structure that covers the theoretical risk of non-payment of guarantees, giving access to a first loss amount of up to €1 billion, covered by a pledge of shares and by payment deferrals.

With this agreement, Siemens Energy considered that its order growth in key projects for the energy transition can now be secured in the long term, while reducing the risks of the parties involved. All agreements are subject to formal approval by the parties involved.