Siemens Energy's wind division faces a turbulent future, with limited synergies between its onshore and offshore wind operations. This is the core of the issue, and it's something investors and industry watchers are keenly focused on. Let's dive in.
On Friday, the CEO of Siemens Energy shared some insights that paint a complex picture. The company's wind division, Siemens Gamesa, which handles both offshore and onshore turbines, is still navigating challenges. The division is recovering from a quality crisis that began two years ago. This has led to significant financial setbacks, with an operating loss of 1.36 billion euros (approximately $1.59 billion) reported for the fiscal year ending in September.
But here's where it gets controversial: Despite these losses, Siemens Energy is optimistic about the long-term potential of wind energy. They've even raised their mid-term targets and proposed their first dividend in four years, thanks to strong demand in other areas like gas turbines and power grids. They expect Siemens Gamesa to break even by 2026.
"Keep in mind it's a tale of two cities," said Siemens Energy CEO Christian Bruch. The offshore wind business is a market leader with excellent products. The CEO believes they are well-positioned to grow margins if the market continues to thrive. However, the situation is different for onshore wind. Quality issues have caused them to halt sales of their newer generation turbines.
And this is the part most people miss: The CEO is uncertain about the future of the onshore market, particularly concerning competition from China. He stated, "the key question will be: Will the Chinese flood the market or not? I don't know this yet. So I think it's too early to say ... what direction it will go."
When asked about potentially separating the struggling onshore business, Bruch stated that the synergies between the two businesses are "more limited than people believe."
What do you think? Do you agree with the CEO's assessment of limited synergies? How do you see the future of Siemens Gamesa unfolding, given the challenges in onshore wind and the successes in offshore wind? Share your thoughts in the comments below!
