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Siemens Energy promised a turnaround at its troubled wind turbine business was under way as the company raised its revenue outlook and sought to draw a line under a crisis that has wiped billions from its market value.
A new chief executive, Vinod Philip, will take charge of wind division Siemens Gamesa in August and will oversee job cuts in order to regain control of costs, the company announced on Wednesday.
Group operating profit rose fourfold, to €170mn, in its second quarter compared with a year previously, and the company raised its full-year revenue growth forecast from 3-7 per cent to 10-12 per cent.
Siemens Energy also said it would resume sales of its two troubled turbine models, the 4.x and 5.x, in the coming months. The suspension of sales for the two platforms — due to widespread engineering defects identified last year — led the company to a €4.6bn loss in 2023 and deepened a funding crisis for its renewable energy project pipeline that triggered a €15bn government bailout.
“The turnaround of our wind business is still our focus. To this end, we are taking steps to reduce complexity and create a more focused business,” said Siemens Energy chief executive Christian Bruch.
Shares in the company, which was spun out from its namesake Siemens, the German engineering giant in 2020, had risen 13 per cent by early afternoon, almost erasing their losses over the past year. Siemens still owns a quarter of the company.
The group’s robust quarterly results were mainly driven by the performance of its Grid Technologies and Transformation of Industry divisions, but the company said it expects Gamesa to be a major driver of revenue growth in the second half of its financial year.
Gamesa will adopt a more streamlined approach in the future. The company has previously said it hopes to make €400mn of cost cuts at the division, and claimed the restructuring announced on Wednesday was the first “concrete step” towards achieving them.
“We will not defend each and every market,” Bruch said.
The company’s turbine business will focus on Europe and the US from now on, it said, with production capacity due to be ramped up at key sites in Denmark, France and Germany.
Bruch praised outgoing Gamesa chief Jochen Eickholt, who only took over in March 2022, and was not responsible for the problems with the company’s turbines. The division required a “generational change”, Bruch said.
Siemens Gamesa’s challenges come as the wider wind industry has been under pressure due to rising interest rates and supply chain strains pushing up costs.
Demand nevertheless remains high. A record 117 gigawatts of new capacity was installed last year, according to a recent report by the Global Wind Energy Council trade group.
Additional reporting by Rachel Millard in London
