The logo of energy technology company Siemens Energy is displayed during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. Portal/Chris Helgren/File Photo Acquire License Rights
- Company stocks fall to all-time lows, market value declines
- Siemens Energy and the government confirm talks according to media reports
- The government is sympathetic but wants stakeholders to get involved
- Liberals say guarantees are the responsibility of the property owners, not the state
BERLIN, Oct 26 (Portal) – Siemens Energy (ENR1n.DE) shares plunged nearly 40% on Thursday, shedding 3 billion euros ($3.16 billion) from their market value, after the group announced had stated that he was in talks with the German government about government bonds guaranteed after major setbacks with his wind turbine.
A spokesman for the Federal Ministry of Economics also confirmed the discussions and described them as “close and trustworthy”.
Shares in Siemens Energy fell to all-time lows on the news, marking a market value loss of 3.3 billion euros to 5.3 billion euros since Wednesday, and were down more than 32% to 7.20 euros by 1359 GMT.
Quality problems emerged this year in the wind division of power technology company Siemens Gamesa, which focused on blades and gears in newer onshore wind turbines, drawing the ire of major shareholder and former parent company Siemens AG (SIEGn.DE).
Siemens Gamesa has therefore recorded billions in losses.
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As a result, Siemens Energy fears it will have difficulty obtaining guarantees from banks and has turned to the government and Siemens to obtain a guarantee framework, WirtschaftsWoche reported.
The weekly newspaper, which initially reported on the talks together with the Spiegel magazine, said Siemens Energy strut in the amount of up to 15 billion euros.
The German state would be liable for 80 percent of an initial financing tranche of ten billion euros, while the banks would be liable for the remaining 20 percent, according to WirtschaftsWoche.
A spokesman for Siemens AG, which, according to the report, should take over the guarantee for a second tranche of the remaining 5 billion euros, said the company was waiting for further details.
“Siemens is currently in close and ongoing discussions with all parties involved,” the spokesman added. Siemens remains the anchor investor in Siemens Energy and retains a 25.1% stake.
In a statement confirming the talks, Siemens Energy said this year’s financial results are expected to be fully in line with previous forecasts and that Siemens Gamesa is working on its quality issues.
Siemens Energy is expected to release its annual results on November 15 and host a capital markets day on November 21, the company’s website said.
There was no comment on the financial details of a targeted package. Siemens Energy’s budgeting process is still ongoing and decisions about the 2024 annual budget or specific financing measures have not yet been made by the board, it said.
Government circles in Berlin did not want to comment on the scope of a possible package. The government is ready to help Siemens Energy and stakeholders must also play their role, they said.
The German Economy Ministry pledged on Tuesday to support the industry on its path to a low-carbon economy, and the European Commission also published an action plan for the European wind industry.
The Free Democrats, junior partners in the German government coalition, criticized the prospect of state aid.
“The German state cannot give companies guarantees on a weekly basis. “That is the responsibility of the owners,” said Michael Kruse, energy policy spokesman for the Bundestag parliamentary group, to the newspaper “Die Welt”.
In August, Siemens Energy said Gamesa’s problems would be the main factor increasing its annual loss sixfold to 4.5 billion euros in 2023.
The magazine “Spiegel” quoted sources close to the company as saying that the losses could be higher.
Top executives at Siemens Gamesa, the world’s largest maker of offshore wind turbines, were replaced without any improvement in profitability.
JPMorgan said in a statement that the energy transition will require significantly higher rates of investment, which will bring commercial opportunities for Siemens Energy and industry peers.
Credit guarantees, which are provided as insurance for customers, had to increase accordingly, a development that JPMorgan also sees for Vestas (VWS.CO), Prysmian (PRY.MI), Nexans (NEXS.PA) and NKT (NKT.CO).
The possibility of a capital increase has also increased, it was said.
($1 = 0.9493 euros)
Reporting by Matthias Inverardi, Christian Kraemer and Alexander Hübner; writing by Vera Eckert, Friederike Heine and Miranda Murray; Edited by Sabine Wollrab, Rachel More, Jan Harvey and Susan Fenton
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