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Siemens Energy Secures Order Growth with Government and Private Bank Guarantees

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Andrew R. Michaud

• November 15, 2023

Shares in Siemens Energy rose on Wednesday after the energy company announced that it had secured guarantees from the German government and private banks to support its order growth. This news comes as the company faces mounting problems at its wind unit.

At 0950 GMT, the stock trades up 3.8% at EUR10.64.

Government Provides Significant Support

In a move to bolster Siemens Energy's position, the German government has agreed to provide 7.5 billion euros ($8.16 billion) of state guarantees to the company as part of guarantee lines totaling EUR15 billion. The company has stated that it needs support for long-term projects, as its current order backlog amounts to EUR112 billion.

"Our order books are actually growing more quickly than our revenue," said Chief Executive Christian Bunch during a call following the release of the fourth-quarter results.

Uncertainty Surrounding Guarantees

While it is currently unclear how long these guarantees will be in place, Bunch said he assumes it will be less than two years. In the meantime, the company is actively working to strengthen its balance sheet.

In light of these guarantees, dividends and management bonuses will be suspended for the agreed-upon duration.

"As long as we're a loss-making company, I understand this requirement," Bunch said, emphasizing that the company's main focus is to generate net profit in order to be in a position to pay dividends to its shareholders.

Challenges Faced by Siemens Energy

Siemens Energy experienced a loss in the fourth quarter of its fiscal year, largely due to challenges at its troubled wind-turbine business, Siemens Gamesa. The wind-turbine business is currently dealing with quality issues in the onshore sector, increased product costs, and ramp-up challenges in offshore operations.