Published On : 11/21/2023

Siemens Energy’s struggling wind unit plans $436 million in cost cuts

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) -Siemens Gamesa, the struggling wind division of Germany’s Siemens Energy, plans to cut costs by around 400 million euros ($436 million) by 2026, the group said during its much-awaited capital markets day on Tuesday.

The goal was to “simplify organization and optimize overhead costs” while the Siemens Gamesa’s onshore wind turbine capacity is to be adjusted according to a refined product and market roadmap, according to presentation slides said.

Measures will include a review of its onshore product offering as well as the markets it is catering to, streamlining its service organisation as well as looking into supply chain partnerships, the company said.

“The turnaround of Siemens Gamesa remains our highest priority and we now have a defined path and action plan to reach break-even for the wind business in fiscal year 2026 and to return to profitability thereafter,” Siemens Energy CEO Christian Bruch told analysts.

“We will be very strict with capital allocation.”

The comments come less than a week after Siemens Energy disclosed a 4.6-billion-euro loss due to Siemens Gamesa, where a mix of product quality issues and ramp-up problems have pushed a much anticipated break-even out to 2026.

Siemens Energy also recently secured a 15 billion euro guarantee package needed to safeguard its 112 billion order book, an agreement that has caused the group’s shares to recover from a recent record low.

Siemens Gamesa, which has become a major burden for its parent, will also reduce the number of turbine variants it sells and pause any wind product initiatives in what it says are “adjacent fields”, singling out hydrogen.

($1 = 0.9168 euros)

(Reporting by Christoph SteitzEditing by Madeline Chambers, Miranda Murray and David Evans)

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