Siemens Energy shake-up includes new CEO

Frankfurt/Düsseldorf — Siemens Energy unveiled sweeping changes at its struggling wind division on Wednesday, including job cuts and a new CEO, tightening its grip on a loss-making business as the provider of power equipment emerges from its biggest crisis to date.

The announcement, which was flanked by a raised full-year outlook and a fourfold increase in quarterly operating profit, caused shares in the former Siemens division to soar 11.5% to the top of Germany’s blue-chip index by 8.28am GMT.

That was the highest level since the company disclosed major quality issues at its newer onshore wind turbine platforms 4.X and 5.X last June, causing shares to plummet and forcing the group to seek billions of euros in state-backed guarantees.

“The turnaround of our wind business is still our focus. To this end, we are taking steps to reduce complexity and create a more focused business,” Siemens Energy CEO Christian Bruch said.

As part of the changes, which will include unspecified job and capacity cuts, board member Vinod Philip will become the new CEO of wind turbine unit Siemens Gamesa from August, the group said, adding it was time for a generational change.

Philip, who is now in charge of functions such as IT, logistics and purchasing, joined Siemens Energy’s management board in 2022 after spending more than two decades in various roles at Siemens.

He will replace Jochen Eickholt, also a Siemens veteran, who led the wind turbine maker through its most turbulent time since it was created in 2017, including 2023’s onshore wind turbine troubles.

Raised outlook

“It is only fair to emphasise that the causes of the quality problems did not fall under his tenure as CEO,” Bruch said of Eickholt, adding that Philip was an “excellent and highly esteemed manager”.

Siemens Energy said it would resume sales of revised versions of its 4.X turbines in Europe by the end of September, adding the 5.X platform was expected to re-enter the market in 2025. Both models are now not being sold.

Going forward, Siemens Gamesa’s onshore business would be focused on two main markets, Europe and the US, the group said, fleshing out a more streamlined approach that was first flagged in late 2023.

Siemens Energy, which competes with Vestas and GE Vernova, said it would stick to both onshore and offshore, allaying concerns it may sell or shut down parts of its wind business.

Thanks to strong demand for power grid equipment, Siemens Energy also raised its outlook for sales, operating profit and free cash flow in 2024, now expecting revenues to grow by 10%-12% in 2024.

Free cash flow pretax is now expected to be up as much as €1bn, Siemens Energy said, having previously guided for a negative cash position of up to €1bn. Second-quarter profit before special items rose more than fourfold to €170m.

“Very strong reporting. Visibility to us seemed rather low so this is a positive surprise,” a local trader said.

Reuters