Shares of Siemens Energy experienced a significant 35% drop on Thursday, following the company’s request for financial guarantees from the German government.
Shares of Siemens Energy experienced a significant 35% drop on Thursday, following the company’s request for financial guarantees from the German government. This development comes after the wind power giant garnered attention earlier this year for nullifying its profit forecast, citing a notable surge in failure rates of wind turbine components within its subsidiary, Siemens Gamesa.
Siemens Energy’s wind division, Siemens Gamesa, faced major setbacks, and the company expressed concerns that these challenges could persist for an extended period. In response to this situation, Siemens Energy stated, “The strong growth in order intake, particularly in the former Gas and Power business areas, leads to a rising need of guarantees for long-term projects.”
To address this need, the company’s Executive Board is actively exploring various strategies to bolster Siemens Energy’s financial position. This includes preliminary discussions with stakeholders such as banking partners and the German government, aimed at securing the necessary guarantees to support anticipated robust growth.
While German business news outlet, WirtschaftsWoche, reported that company is seeking potential guarantees of up to 15 billion euros (approximately $15.8 billion), the company has not confirmed this figure. Siemens Energy emphasized that its financial results for the fiscal year 2023 are anticipated to align with its existing guidance.
Siemens Energy is slated to unveil its fiscal fourth-quarter results on November 15. Notably, the company has not yet finalized its annual budget for 2024.
Addressing the challenges faced by Siemens Gamesa, Siemens Energy assured that efforts are underway to rectify quality issues and address offshore ramp-up challenges, as previously communicated in the third-quarter update for fiscal year 2023.
As the selloff intensified, company’s stock plummeted, positioning it at the bottom of the pan-European Stoxx 600 index. This development underscores the significance of the company’s efforts to secure governmental support and stabilize its financial outlook.
Siemens Energy’s quest for guarantees reflects a strategic move to navigate through the current challenges and position itself for sustained growth in the renewable energy sector. The outcome of these discussions with the German government and other stakeholders will play a pivotal role in shaping the company’s future trajectory.