On June 23, the shares of Siemens Energy, the former Siemens Gamesa, starred in the true concept of a stock market crash by falling more than 37%. The manufacturer of electric wind turbine blades presented to the market the third profit warning (profit warning, in financial jargon) since the German company took control of the Spanish company from Zamudio in 2017.
Its president and CEO, Christian Bruch, recognized that a problem in the latest model of its wind turbines, known as 5.X, the most powerful in the world, could erase the benefits they expected for 2023 due to the need to address some compensation that will exceed 1,000 million euros. “We still do not have the final figure, but I can anticipate that the result of the review that we are carrying out will be much worse than I would have thought possible,” Bruch acknowledged.
The lack of details – they will not be given until the results are presented in August – has sparked rumors about whether the economic impact could go further and take the company ahead. “There is talk of contractual conditions that include compensation for the stoppage of the machines, for example, and that could lead to millions in losses,” say the analysts.
The truth is that the drama of Siemens Energy comes from afar. Beyond the specific problem that now looms over its latest star innovation, the company has been dragging problems “since the arrival of the Germans at the management,” they say in the sector and union sources confirm.
That was in 2017. The German Siemens saw in the Spanish Gamesa its opportunity to grow in a booming business, that of onshore wind energy, to which Zamudio’s had risen in the eighties of the last century. Already in 1995, when wind power was little more than a promise, it installed its first wind farm in the hills of El Perdón, in Navarra. Since then, Gamesa has rubbed shoulders with global giants at the forefront of onshore wind power. The arrival of German capital coincided with the rise of renewable energies in Spain promoted by the Government of Pedro Sánchez, first, and the European Union, later, as a response to alleviate the energy dependence that the war in Ukraine exposed.
None of this has managed to take advantage of the German Gamesa. “The merger with Siemens has been a disaster. The Germans have been incapable of merging the idiosyncrasies of both companies, despite the fact that two great technological leaders came together”, explain sources from the energy sector. The internal analysis is the same. “The shareholding was friendly, but the merger soon turned into an acquisition. They came saying that they wanted to learn from our knowledge in onshore (terrestrial) wind energy, but they dismantled the leadership that had made Gamesa great”, union sources explain.
The Gamesa command chair was never comfortable for its new owners. Since then, the current Siemmens Energy has already seen three CEOs – Markus Tacke, Andreas Nauen and Jochen Eickholt – pass before Bruch. Along with them, three reformulations of their accounts. With accumulated losses of more than 2,485 million euros between 2020, 2021 and 2022 and a debt close to 2,000 million. Three blade production plants have been closed, resulting in the departure of some 1,800 employees, according to union sources. Added to them is an ongoing regulation file for office staff. “The stoppage of the pandemic was a very strong blow to our production,” explained Susana Errasti, purchasing director for southern Europe and Africa during a speech at the Congress of the Association of Wind Power Companies.
The sector has faced problems in the supply chain of essential parts for the production of blades. “Critical components went from arriving in 12 weeks to arriving in 72. The shortage of ships triggered the cost and it has not been transferred to the rest of the value chain,” the directive pointed out.
Added to this, according to Errasti, is the public auction system where, in order to access contracts, the price is lower. “In some cases, even below the level of profitability of the companies. If this is not changed, it will be difficult to maintain production chains in Spain and Europe, ”he assured.
His colleague Víctor Equisoain, CEO of his competitor Nordex, owned by Acciona, goes further by explaining the problems of these companies. “During these past years, there were many plans and presentations, but they do not correspond to the sales. We have not sold. That is why we lose ”, he recognized. Other sources in the sector speak of margin problems under pressure from the large electricity companies, which are the ones that buy.
“In any case, these reasons do not explain the situation we are in. The stage has not been easy, but neither has it been for the competition and the situation at Vestas, for example, is not the same. The real problem for Siemens with Gamesa is that those who have been put in charge are people from outside the sector who are not capable of taking control of the business”, say union sources.
