Siemens Energy has pledged a turnaround for its troubled wind turbine business, aiming to recover from a crisis that has significantly impacted its market value. The company announced a new chief executive, Vinod Philip, who will assume leadership of the wind division Siemens Gamesa in August. Philip’s mandate includes overseeing job cuts to address cost issues within the company.
Despite facing challenges, Siemens Energy reported a significant improvement in group operating profit, which surged fourfold to €170 million in the second quarter compared to the previous year. Encouraged by this performance, the company has revised its full-year revenue growth forecast from 3-7% to 10-12%.
In a bid to stabilize its wind turbine business, Siemens Energy announced plans to resume sales of its two troubled turbine models, the 4.x and 5.x, in the coming months. Suspension of sales for these platforms, due to engineering defects identified last year, had led to substantial losses for the company in 2023 and prompted a government bailout.
Siemens Energy’s CEO, Christian Bruch, emphasized the company’s commitment to turning around its wind business, stating, “The turnaround of our wind business is still our focus. To this end, we are taking steps to reduce complexity and create a more focused business.”
The company’s stock saw a notable increase of 13% by early afternoon, nearly offsetting its losses over the past year. Siemens still holds a quarter of the company’s shares.
While the company’s quarterly results were bolstered by strong performances in its Grid Technologies and Transformation of Industry divisions, Siemens Energy expects Siemens Gamesa to be a key driver of revenue growth in the second half of the financial year.
Siemens Gamesa is set to adopt a more streamlined approach in the future, with plans to achieve €400 million in cost cuts at the division. The restructuring announced signals the company’s commitment to this goal.
Siemens Gamesa’s focus will now primarily be on Europe and the US, with production capacity set to be increased at key sites in Denmark, France, and Germany. CEO Christian Bruch acknowledged the need for a “generational change” within the division.
The challenges faced by Siemens Gamesa come amidst broader pressures on the wind industry, including rising interest rates and supply chain disruptions. Despite these challenges, demand for wind energy remains robust, with a record 117 gigawatts of new capacity installed last year, according to the Global Wind Energy Council.