On the same day that Federal President Frank-Walter Steinmeier visits the Siemens Energy plant in Mühlheim with a large international delegation, he is struck by an unprecedented crisis. Hundreds of millions of euros in losses last quarter and more than 40% of the company’s share price on the stock market as of Friday have clouded enthusiasm for how the traditional power plant business is becoming a major player in the hydrogen economy.

On Tuesday, Steinmeier was accompanied by approx. 150 ambassadors of states and heads of international organizations, as reported by the office of the federal president, quoted by Badische Zeitung. The Prime Minister of North Rhine-Westphalia Hendrik Wüst (CDU) welcomed the President of Germany and guests from all over the world.

But the visit comes amid a crisis at Gamesa’s wind energy subsidiary. Siemens Energy shares fell 37% on Friday due to quality problems with wind turbines. On Monday, the fall continued, they temporarily lost another 3.5% of value.

Wind energy on the report

When Siemens listed its Energy subsidiary in 2020, it initially seemed that conventional power plants were the “past” and wind farms were the future. But now the company, which was spun off from Siemens in 2020, spooked investors with another profit-loss warning, withdrawing its slightly more optimistic May forecast. But it also foreshadowed the loss of hundreds of millions of euros.

In its traditional business, Energy will cut 7,800 jobs by 2025. But in the meantime, it has become clear that the biggest problem is the wind energy subsidiary, Gamesa. Siemens Energy has already booked a loss of 598 million euros in the first quarter due to huge Gamesa losses, the group announced in February.

A billion failures

Siemens Energy became known to the general public after Chancellor Olaf Scholz visited the gas turbine in Mühlheim, which is part of the Nord Stream gas pipeline and is operated by Siemens Energy. Gazprom first used this as an excuse to cut gas supplies, and then stopped them.

Onshore wind turbines have now been found to repeatedly fail partially or completely. The scale of the problems is greater than expected, said the head of Siemens Energy, Christian Bruch. It is currently unclear how many repairs will be required to the rotor blades or bearings of the already installed systems, and Siemens Energy expects to spend more than one billion euros in the coming years.

Productivity gains at Siemens Gamesaa were also expected to be lower than expected, and offshore wind farms are also struggling: “Furthermore, we continue to see difficulties in increasing production capacity in the offshore sector,” he explained to Siemens Energy.

Spain’s parent company and problem child

This is not the first time that problems at Siemens Gamesa have caused the parent company to lower its earnings forecast for the current year. Siemens had already expected a net loss of more than €800m for 2022/23 (end of September). Siemens Gamesa has already spoiled the plans of the Munich company several times.

Siemens Gamesa, one of the world’s largest wind turbine makers, has kept the group in limbo for years as the integration of Siemens’ wind farm unit and rival Gamesa, which merged to create Siemens Gamesa, largely failed.

Several changes at the top of Siemens Gamesa’s board of directors have so far been unsuccessful. The administrator responsible for the stabilization of the company in Spain, Jochen Eickholt, was sent from Munich, but his task is huge, writes Tagesschau.de.

However, the Siemens concern maintains the sales forecast for the group of gas services, network technologies and Transformation of Industry. As for consolidated sales, the company expects significant sales growth of 10-12%.

Siemens Energy has long wondered how to deal with Spain’s “problem child”. Some experts are already wondering whether Siemens Gamesa is capable of restructuring. But Bruch is betting on wind energy and the restructuring of Siemens Gamesa: “The success of the wind business remains the main condition for us to become a profitable market leader in the field of energy transition,” said the CEO of Siemens Energy.