Siemens Energy flies to Frankfurt, raises guidance and restructures wind power business

(Il Sole 24 Ore Radiocor) - Siemens Energy is soaring on the Frankfurt Stock Exchange after raising its forecasts for the 2024 financial year, thanks to a return to profit in the second quarter, and finalising the reorganisation of its troubled wind power subsidiary, for which it also appointed a new ceo. The share price of theGerman energy technology group is moving higher than the Dax and also the Stoxx Europe 600. Since the beginning of the year, the share price has accumulated a gain of almost 85 per cent.

In the three months to March, Siemens Energy posted a net profit of 68 million compared to a loss of 204 million in the same period in 2023. Turnover improved by 3.7 per cent in comparable figures to 8.28 billion, driven by 'significant growth in the network technology and industry transformation segments'. Profit before exceptional items totalled EUR 170 million compared to EUR 41 million last year, also benefiting from positive currency effects. New orders, on the other hand, decreased by 22% to EUR 9.47 billion 'as expected, in view of last year's high level'. Free cash flow was positive at EUR 483 million against a negative figure of EUR 294 million. "As a result of the strong performance in the first half of the year", Siemens Energy has raised its outlook for the 2024 financial year, which ends in September. Management now expects comparable revenue growth of between 10% and 12% versus the previous 3-7% and a pre-overtime profit margin of between -1% and +1% versus -2% and +1%. Pre-tax free cash flow is estimated to be positive 1 billion versus the previous guidance of -1 billion.

Separately, the group announced that it has started the global restructuring of the Siemens Gamesa subsidiary, which specialises in wind energy. The current CEO, Jochen Eickholt, will leave the position on 31 July and pass it on to Vinod Philip, effective 1 August. As a release states, 'Siemens Gamesa has initiated extensive restructuring measures and initiatives for long-term strategic development with the aim of achieving a double-digit operating margin. The goal of the measures is to break even by 2026 and then return to profitable growth'.

The company will remain active in both onshore and offshore business, but the onshore business will mainly focus on markets that offer a stable and prospectively profitable regulatory framework. Specifically, these are the European and US markets, and production capacities in the onshore area will be adapted to the new orientation. Offshore will instead aim for an increase in capacity. A new organisational model will then reduce management levels and define responsibilities more clearly. "The organisational realignment will also involve adjustments in the workforce," although overall "it is expected thatthe number of employees at Siemens Gamesa will remain more or less constant in the coming years, as areas such as offshore are growing." The exact impact of the job cuts, especially on individual countries and locations, 'cannot yet be quantified'.