Siemens Energy considers full takeover of Siemens Gamesa

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Siemens Energy considers full takeover of Siemens Gamesa

18 May 2022 Clean energy investing 0

Siemens Energy is considering buying all the shares it does not already own in Spanish-listed wind group Siemens Gamesa, in an attempt to gain full control over the beleaguered renewables company.

The German group, which already owns 67 per cent of the turbine maker, said on Wednesday it was considering an offer for “all outstanding shares in Siemens Gamesa Renewable Energy SA with the intention to delist”.

Shares in Siemens Gamesa surged more than 11 per cent on the announcement, while Siemens Energy shares rose more that 2 per cent.

A string of profit warnings and losses at Siemens Gamesa, one of the world’s biggest wind turbine makers, has resulted in the company shuffling though chief executives.

Jochen Eickholt, a Siemens veteran, was appointed in March to turn round its performance.

Gamesa’s underperformance forced Siemens Energy to issue a profit warning last month and withdraw its guidance, as the German company estimated additional costs of roughly €800mn in 2022 because of onerous contracts and operational inefficiencies at its subsidiary.

The troubles at Siemens Gamesa have caused its share price to fall more than 50 per cent over the past year — a sharper drop than that suffered by competitors such as Denmark’s Vestas, which have also been hit by supply chain turmoil.

Siemens Gamesa was created as a separate listed company five years ago after the merger of Siemens’ wind business with Spain’s Gamesa. Siemens Energy held a 59 per cent stake in the new company after that deal.

Siemens Energy was spun out of Siemens in September 2020, and retained Siemens’ holding in Siemens Gamesa. The turmoil at Gamesa has left Siemens Energy unable to reduce its stake without booking an enormous loss, while Siemens was unable to reduce its 35 per cent stake in its former subsidiary without taking a hit.

The wind turbine maker reported losses of €1.35bn in the last four quarters, and revenues of €9.57bn during that same period.

The company has struggled with the rollout of its new onshore wind turbine, the 5X, which has not performed as well as expected, contributing to the losses.

The global supply chain crisis, high energy prices and the inflationary environment have also hurt the company, along with its wind turbine manufacturing peers, whose contracts tend to be long-term and vulnerable to sudden surges in the cost of labour and raw materials.

Even though Europe plans to more than double its total wind installations by 2030, turbine makers have been struggling to break even in a highly competitive market.

“Everybody is struggling with the market conditions — it is sort of the perfect storm for the industry,” said Vera Diehl, a portfolio manager at Union, one of Siemens Energy’s top five shareholders.

“Freight costs are increasing by such a pace that it hits the industry very hard,” she added, while “commodity prices have been spiking”, with Siemens Gamesa’s contracts “lacking clauses to pass this on directly” to customers.

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