Siemens Gamesa comprehensive reform, layoffs, change of managers, restructuring, seeking to turn the wind power business into profit
Siemens Gamesa comprehensive reform, layoffs, change of managers, restructuring, seeking to turn the wind power business into profit
Siemens Energy has announced an overhaul of its struggling wind power division, Siemens Gamesa, with the aim of turning a profit. The reforms include job cuts and the appointment of a new chief executive.
Siemens Gamesa suffered a 4.6 billion euro loss in 2023 due to high costs and technical problems with its wind turbines, further exacerbating the funding woes of its renewable energy projects. As a result, the company struck a 15 billion euro ($16.1 billion) deal with the German government and former parent company Siemens AG to improve its financial position by taking it private and delisting.
The structural reform involves job cuts and production adjustments in the onshore wind business. Although the exact number of layoffs has not been announced, the restructuring is expected to result in some job changes. However, given the growth potential in areas such as offshore wind, Siemens Gamesa expects the total number of employees to remain stable in the coming years.
Christian Bruch, CEO of Siemens Energy, said that turning a profit is the core objective of the wind business. To that end, they are simplifying their operations and increasing their focus. Gamesa has embarked on a comprehensive restructuring plan to reach break-even and return to profitable growth by 2026.
Going forward, the group plans to focus its onshore business on its core markets of Europe and the United States. In an interview with Bloomberg TV, Bruch stressed the importance of selectivity and revealed Gamesa will resume sales of X onshore turbines by the end of this fiscal year and restart sales of X onshore turbines early next fiscal year.
Siemens Gamesa will also have a new CEO. This is the fourth time since 2017 that the head of the department has changed. Jochen Eickholt, who has held the position since March 2022, will be succeeded by Vinod Philip, 50, head of Siemens Energy's IT, procurement and innovation division. Eichholt, 62, will officially step down in July.
Driven by strong demand for grid equipment, Siemens Energy raised its sales, operating profit and free cash flow forecasts for 2024. Revenue is expected to grow by 10%-12% in 2024, with pre-tax free cash flow of up to €1 billion. Profits before special items rose sharply in the second quarter, to €700m ($8.3bn).
"The demand for technologies for the energy transition continues to be strong, and the transition to wind power will continue to be a priority for us," Siemens CEO Joachim Bruch said in a press release. Notably, Siemens Energy was spun off from Siemens in 2020, but still holds a stake of about 25% in Siemens Gamesa. Gamesa, a global leader in wind turbines, was formed by the merger of Siemens Wind Power and Gamesa in July 2016 and is headquartered in Zamudio, Spain. Although Gamesa ranked eighth in the ranking of new installed capacity of global wind turbine manufacturers published by Bloomberg New Energy Finance in March this year, down from the fifth place in 2022, its leading position in the global wind power field is still not to be underestimated.
