The encyclopedia · Finance & Accounting · Financial decision · 2023
Siemens Energy took a €4.6 billion loss as its wind unit's quality failures spiralled
The German energy group posted a record net loss in fiscal 2023 after quality problems at Siemens Gamesa forced warranty provisions and a state-backed rescue.
Siemens Energy · 2023-11-15
What happened
Siemens Energy is a German energy-technology company spun off from Siemens AG in 2020. Its wind-turbine subsidiary, Siemens Gamesa, was created from the 2017 merger of Siemens Wind Power and Spain's Gamesa.
In November 2023, Siemens Energy reported a record net loss of €4.6 billion for fiscal 2022-2023. The loss was driven mainly by quality failures in Siemens Gamesa's onshore platforms, which required large warranty provisions, project delays and remedial work.
The company secured €15 billion in credit and guarantees backed by the German government to stabilise operations. The crisis forced Siemens Energy to take Siemens Gamesa private and launch a sweeping restructuring of the wind business.
Why it happened
- The Siemens-Gamesa merger was never fully integrated, leaving accountability for quality and costs fragmented across countries and business lines.
- Quality problems in onshore turbine platforms were allowed to grow until they required warranty provisions large enough to wipe out group profit.
- Management pursued market share and order volume in wind without matching the growth with disciplined product testing and risk reserves.
- The offshore wind ramp-up added cost and complexity at the same time the onshore business was bleeding cash.
The lesson
An acquisition premium and growth ambition mean nothing if the acquired unit's quality problems are allowed to outrun its warranty reserves.
Aftermath
Siemens Energy secured state guarantees, took Siemens Gamesa private, and launched a restructuring programme aimed at breaking even by fiscal 2026.
Sources
- Siemens Energy loses 4.6 bln euros in wind turbine business during 2022-2023 — Xinhua
- Siemens Energy Gets Government Rescue — Global Finance Magazine
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