Siemens Energy is considering buying all the shares it does not yet own, in the Spanish wind group Siemens Gamesa, in an attempt to gain full control of the besieged recovery company.
The German group, which already owns 67 percent of the turbine maker, said Wednesday it was considering a bid on “all outstanding shares in Siemens Gamesa Renewable Energy SA with the intention of excluding it from the listing.”
Shares of Siemens Gamesa rose more than 11 percent after the announcement, while shares of Siemens Energy rose more than 2 percent.
A series of profit and loss warnings at Siemens Gamesa, one of the world’s largest wind turbine manufacturers, has led the company to change with executives.
Jochen Eichholt, a veteran of Siemens, was appointed in March to fix his job.
Insufficient performance Gamesa forced Siemens Energy to issue a profit warning last month and withdraw its recommendations as the German company estimated additional costs at around € 800 million in 2022 due to heavy contracts and inefficiencies in its subsidiary.
Problems at Siemens Games have led to a drop in its share price of more than 50 percent over the past year – a sharper drop than that of competitors such as Denmark’s Vestas, which has also been hit by supply chain shocks.
Siemens Gamesa was established as a separate exchange company five years ago after the merger of Siemens ’wind business with Spanish Gamesa. Following the deal, Siemens Energy owned 59% of the new company.
Siemens Energy was separated from Siemens in September 2020 and retained Siemens ’involvement in Siemens Gamesa. Due to the turmoil at Gamesa, Siemens Energy was unable to reduce its stake without booking huge losses, while Siemens was unable to reduce its 35 per cent stake in its former subsidiary without receiving a hit.
The wind turbine manufacturer reported losses of 1.35 billion euros over the past four quarters and revenues of 9.57 billion euros over the same period.
The company struggled with the deployment of its new onshore wind farm 5X, which did not work as well as expected, leading to losses.
The global supply chain crisis, high energy prices and inflation have also hurt the company, as well as its wind turbine counterparts, whose contracts tend to be long-term and vulnerable to sudden spikes in labor and raw material costs.
Although Europe plans to more than double the total number of wind turbines by 2030, turbine manufacturers have been fights to enter even a highly competitive market.
“Everyone is struggling with market conditions – it’s kind of the perfect storm for the industry,” said Vera Dill, portfolio manager at Union, one of Siemens Energy’s five major shareholders.
“Freight costs are growing at such a rate that it is hitting the industry hard,” she added, while “commodity prices are rising” in Siemens Games’ contracts “lacks points to pass it on directly” to customers.