Siemens Energy shares in Germany crashed on Thursday after the company warned its wind turbine business is grappling with quality issues and offshore ramp-up challenges. The company said it's evaluating various measures to strengthen its balance sheet and is discussing state guarantees with the German government. This comes as a financial crisis in offshore wind energy is brewing.
Siemens Energy said the wind business Siemens Gamesa "is working through the quality issues and is addressing the offshore ramp up challenges as announced in the third quarter communication for fiscal year 2023."
"As Siemens Gamesa is for the time being not concluding new contracts for certain onshore platforms and is applying strict selectivity in the offshore business, order intake and revenue are expected to be lower than market expectations for fiscal year 2024, and net losses and cash outflow are expected to be higher than market forecasts," the statement continued.
The German company said, "The Executive Board is evaluating various measures to strengthen the balance sheet of Siemens Energy and is in preliminary talks with different stakeholders, including banking partners and the German government, to ensure access to an increasing volume of guarantees necessary to facilitate the anticipated strong growth."
Shares of Siemens Energy crashed 37% in Germany.
We have outlined for months a "financial crisis is unfolding in the offshore wind power industry" due to "soaring inflation costs have undercut the sector's growth and left major projects dead in the water just when their output is most needed."
Two months ago, Orsted A/S, the world's largest offshore wind farm developer, saw shares crash in Copenhagen trading after it warned: "The situation in US offshore wind is severe." The stress revolves around inflation, high interest rates, and supply chain woes, which have led to the company considering abandoning US offshore projects:
"We are still upholding a real option to walk away," Orsted CEO Mads Nipper told Bloomberg in an interview in London in early September.
It's not just wind that's in trouble. Last week, solar equipment maker SolarEdge Technologies saw shares crash as much as 30% on sliding European demand.
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But one thing I appreciate about Siemens companies is their transparency. Other companies (specifically totalitarian biased, e.g. Chinese) are obscure about such issues. The culture is to worry more about losing one's head by admitting wrong then what happens after the equipment is shipped.
Caveat emptor!
«Eickholt said while rotor blades and bearings were partly to blame for the onshore turbine problems, it could not be ruled out that design issues also played a role. Bruch also blamed the corporate culture at Siemens Gamesa, the result of a merger of the wind turbine division of Siemens and Spain's Gamesa, saying: "Too much has been swept under the carpet".»
It's no wonder Siemens AG is trying to dump Siemens Gamesa!