Siemens Gamesa Restructuring, Offshore Business Area Goal to Ramp Up Production Capacity

Business & Finance

May 8, 2024, by Adrijana Buljan

Siemens Gamesa has initiated comprehensive measures for the operational restructuring of the company with the aim of achieving break-even by 2026 and then returning to profitable growth. As part of the long-term strategic development plan, the company will streamline its onshore business and focus on ramping up the capacities in the offshore business area.

“The most important task in the offshore area is the ramp-up of capacities, which is currently running as planned at the sites in Cuxhaven (Germany), Aalborg (Denmark) and Le Havre (France),” Siemens Energy, the owner of the wind turbine OEM, said on 8 May.

Siemens Energy announced the ramp-up in Siemens Gamesa’s production capacity at its existing factories and the goal to achieve break-even by 2026 at its third Capital Market Day in Hamburg, Germany, in November 2023.

Now, Siemens Energy has agreed on the implementation of a multi-year restructuring plan for Siemens Gamesa that, among other things, contains the concrete strategic goal of increasing the production capacities in the offshore business area.

The company is also introducing a new organisational model to reduce hierarchical levels and regulate responsibilities more clearly, which will also result in job adjustments. However, Siemens Energy says it expects the number of employees at Siemens Gamesa to remain roughly constant over the next few years, as areas such as offshore are growing, as it aims to absorb as much of the planned staff reduction in the affected areas as possible through internal job transfers.

The reorganisation will also see Siemens Gamesa’s CEO Jochen Eickholt heading over the function to Vinod Philip on 1 August 2024, before he leaves the company on 30 September.

The reshuffling within the company comes after its full takeover by Siemens Energy and the subsequent integration into the Group, with the next phase of the integration process now starting, as well as Siemens Gamesa’s not-so-good results over the last few years.

In its results for the second quarter (Q2) of Siemens Gamesa’s fiscal year, published on 8 May, Siemens Energy states that orders were “sharply down from a strong prior year quarter as expected”. The order backlog at the end of Q2 decreased to EUR 39 billion.

In addition to onshore orders being impacted by a temporary interruption of sales activities for the 4.X and 5.X turbines, the offshore and service businesses did not receive any large orders when compared to the same quarter of the prior year which included a EUR 1.7 billion order in the UK.

Siemens Gamesa’s Q2 revenue declined moderately as lower revenue in the onshore and service businesses more than offset growth in the offshore area, according to Siemens Energy.

The company also posted a negative profit before Special Items again and said the increased loss year-over-year was mainly volume-driven.

“Profit continued to be impacted by project margins burdened by higher planned costs due to the known quality issues as well as the increased product costs and ramp-up challenges in the offshore area in the prior fiscal year,” Siemens Energy says in the Q2 results for Siemens Gamesa.

In a statement on the restructuring of Siemens Gamesa, Siemens Energy’s CEO Christian Bruch noted that the causes of the quality problems did not fall under the tenure of Siemens Gamesa CEO.

“In a very difficult situation at Siemens Gamesa, Jochen laid the central foundations for the urgently needed reorganization and new start within Siemens Energy. It is only fair to emphasize that the causes of the quality problems did not fall under his tenure as CEO. With the concrete implementation of the multi-year restructuring plan agreed today, the time has now also come for a generational change at Siemens Gamesa,” Christian Bruch said.