Breaking the Chains: Siemens Energy's Bountiful Year Ahead
Bucking Trends and Striding Forward
Robust Q1 Performance - Siemens Energy Marveling Markets with Soaring Success - Siemens Energy experiencing continuous growth and hitting new heights in Q1.
Siemens Energy, leaving its turbulent past behind, is gearing up for a triumphant year. In the recently concluded quarter, deemed the company's most successful since its independence, Siemens Energy raked in a whopping €501 million after-tax profit. This staggering figure represents a near-fivefold increase from the same period last year. While Siemens Gamesa still lingers in the shadows, other divisions are thriving so much that Energy has lifted its projections significantly. Even the latest US tariffs seem like a minor hurdle.
"Inconvenient yet manageable" is how Energy CEO, Christian Bruch, describes the tariff's potential impact. The company estimates the overall burden in the remaining two quarters at a hefty double-digit million euro figure. When compared to recent apprehensions from German automakers, this toll appears quite negligible. The negative consequences are certainly overshadowed by the impressive momentum Energy has gained.
Order surge
This upswing is apparent in the revenue and order intake figures from the second quarter. Revenue soared by around a fifth to nearly €10 billion, and order intake surged to €14.4 billion, not only surpassing expectations but also more than doubling. Bruch can't help but hail this incredible surge as an "order boom." "Rising electricity demand" has played a part, and he has therefore raised the forecast - from a mere break-even point to a potential profit of up to €1 billion. "Our newfound optimism mirrors our faith in the persisting market opportunities as well as our outstanding project execution."
In the past, issues with individual projects, particularly at Gamesa, have caused headaches for the entire company. Energy is confident that it has these issues under control.
Gamesa's lingering troubles
However, Gamesa's troubles are not entirely behind it. During the second quarter, the subsidiary once again reported a substantial loss in its segment. This deficit was, fortunately, more than offset by impressive numbers in the business focused on turbines and maintenance, as well as power grid technology. While Gamesa continues to grapple with issues regarding two crucial types of onshore wind turbines, it is anticipated to reach break-even by next year. If the performance in other areas remains as stellar as it is now, Energy could reach new heights in its results.
Stepping away from guarantees, keeping pockets empty
Yet, Gamesa's challenges aren't completely over. Shareholders won't receive a dividend for the current fiscal year, Bruch explains. The reason for this is the state guarantees Energy received two years ago to secure its full order book. Although the company predicts it will shed these guarantees during the course of the fiscal year, as CFO Maria Ferraro explains, even then Energy can only distribute a dividend based on the earnings generated in the following year, with payments possible as late as 2027.
Yet, shareholders might still have something to cheer about on Thursday - Siemens Energy was one of the top performers on the stock exchange in the morning.
Siemens EnergySiemens GamesaChristian BruchMunichSiemens AGCEO
- Despite Siemens Energy's subsidiary, Siemens Gamesa, experiencing ongoing issues, the company's CEO, Christian Bruch, anticipates reaching new heights in its results due to impressive numbers in turbines and maintenance, as well as power grid technology.
- Despite the looming impact of US tariffs, Energy's CEO, Christian Bruch, considers it an "inconvenient yet manageable" hurdle, estimating the overall burden in the remaining two quarters at a double-digit million euro figure.
- Energy foresees a potential profit of up to €1 billion in 2022, an increase from the mere break-even point, due to rising electricity demand and exceptional project execution.
- Siemens Energy plans to shed the state guarantees it received two years ago during the course of the current fiscal year, but the distribution of a dividend to shareholders may only be possible as late as 2027, based on earnings generated in the following year.
