Siemens Energy, a global powerhouse in the energy sector, experienced a mixed fiscal year in 2023. While 70% of its businesses, including Gas Services, Grid Technologies, and Transformation of Industry sectors, exceeded their revenue forecasts and achieved profit margins in line with or above guidance, the company's wind business, Siemens Gamesa, faced significant challenges.
Siemens Gamesa, once a growth driver for Siemens Energy, has become a burden after deeper-than-expected wind turbine quality issues were disclosed in June. This setback led to a 4.6-billion euro ($5.0-billion) annual net loss for the company. As a result, Siemens Energy is considering exiting some markets and products of its struggling wind turbine business.
In response to these challenges, the German government has provided a rescue package of €7.5 billion ($8 billion) to Siemens Energy. This bailout is part of a larger €15 billion ($16.3 billion) package, with the rest provided by private banks and other stakeholders. The bailout is contingent on Siemens Energy pausing dividend payments and bonuses for board members.
In addition to the government support, Siemens Energy has secured a 12-billion euro credit line from private banks, partly backstopped by the German government. The company has also secured 7.5 billion euros in project-related state guarantees from the German government, following its nearly 5 billion euro loss for the fiscal year. These guarantees are intended to insure the company's customers on prepayments and execution of contracts.
Despite the challenges faced by the wind business, Siemens Energy's gas turbines, capable of burning up to 75% of hydrogen, are planned to run 100% on hydrogen by 2030. This highlights the company's commitment to sustainable energy solutions.