Struggling Siemens Energy Seeks to Slash Wind Power Division Costs
In an attempt to shore up its ailing wind power business, Siemens Energy aims to significantly cut costs. The embattled energy tech giant announced a restructuring plan for its subsidiary, Siemens Gamesa, that promises to save around 400 million euros by 2025-26. The news came during Siemens Energy's Capital Markets Day event in Hamburg last Tuesday. Group CEO Christian Bruch revealed plans to break even in the wind power division this year, over two years later than originally planned.
Quality issues and start-up troubles have plagued Siemens Gamesa, most notably with land turbines and marine turbines (offshore). The company has temporarily halted sales of its 5.X land turbine and is intensifying efforts to ramp up production at offshore factories. It will also be more selective in accepting orders, potentially leading to a low intake in the wind division for the short term.
Siemens Energy predicts another billion-euro loss this fiscal year. The wind power division's woes have been particularly taxing, causing substantial losses in the past financial year. However, Siemens Energy's gas, grids, and industrial transformation business has fared much better. With a significant order backlog, the company is in dire need of funding to tackle the workload; it recently reached an agreement with banks and the government for financial guarantees to secure orders.
Siemens Energy's strategy to enhance profitability goes beyond its wind power division. The company hopes to leverage its strengths in grid technology and industrial transformation. To accomplish this, Siemens Energy plans to invest strategically in key areas and integrate Siemens Gamesa for cost savings.
Enrichment Insights:
Despite the wind power division's problems, Siemens Energy has a positive outlook for its future. The company intends to focus on strategic investments and capacity expansion in wind and gas turbines, as well as grid technology and industrial transformation. In addition, Siemens Energy aims to save €1 billion annually in total costs by 2025 and achieve 50% of this target through the integration of Siemens Gamesa. Other cost-saving measures include organizational efficiency initiatives and a disciplined focus on project selectivity to optimize revenue capabilities.
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