Shares in Siemens Energy plunged nearly 40% on Thursday after the firm said it was in talks with the government in Berlin about state guarantees for its struggling wind farm division.
Thursday’s plunge wiped three billion euros from the company’s market value and also dragged down the former parent group Siemens, which is now the largest shareholder and one of the main drivers of the entire German economy. On Friday, the shares of both companies stabilized.
Siemens Energy
An energy company that was created by the spin-off of the former Gas and Power division of Siemens. Siemens Energy owns Siemens Gamesa. The division of the company was approved by the shareholders of Siemens AG at the extraordinary general meeting of the company on July 9, 2020. Trading of the shares of the new Siemens Energy AG on the Frankfurt Stock Exchange began on September 28. As of June 2023, Siemens will retain a 25.1% stake in the company. The CEO is Christian Bruch, the chairman of the supervisory board is Joe Kaeser. Siemens Energy operates 79 facilities worldwide, including sales and service offices, research and development centers and 15 factories for the production of components such as the aforementioned rotor blades for wind farms.
A spokesman for the Federal Ministry of Economy confirmed to Reuters the negotiations with Siemens Energy and described them as “close and trustworthy”.
Siemens Gamesa, which is involved in the production of electricity from the wind within Siemens Energy, has experienced problems this year, mainly related to the blades in the rotors and gears in the newer types of wind turbines located on land. Siemens Gamesa faces the threat of losses estimated at up to 4.5 billion euros due to these problems.
Siemens Energy is concerned that it will find it difficult to obtain bank guarantees and has therefore turned to both the German government and Siemens for help, German economic weekly WirtschaftsWoche reported.
The weekly, which together with Spiegel magazine was the first to report on the negotiations, said that Siemens Energy wants to obtain guarantees of up to 15 billion euros. According to the weekly, the German government would guarantee 80% of the initial ten billion euro tranche, and the banks would guarantee the remaining 20%.
State aid has opponents
A spokesman for Siemens told Reuters that the company is waiting for more information before deciding on its course of action when it should guarantee the second tranche of five billion euros. Siemens holds a 25.1% stake in Siemens Energy.
German government sources, speaking on condition of anonymity, told Reuters that the government was ready to help Siemens Energy, but that shareholders should also be involved.
On Tuesday, Germany’s economy ministry expressed its will to support industry in general in its transition to low-emission operation. On the same day, the European Commission published an action plan for the development of wind energy.
In the ruling German coalition, however, there is not a complete consensus regarding the aforementioned support. One of the smaller coalition parties, the Free Democratic Party (FDP), was critical of possible state aid.
“The German state cannot provide guarantees to companies on a weekly basis. It is the responsibility of the owners,” FDP caucus spokesman for energy policy Michael Kruse told Die Welt.
In addition to the FDP, Chancellor Olaf Scholz’s Social Democrats (SPD), the strongest coalition party, and the Green Party sit in the German government this election period. Referring to the traditional colors of these parties, the coalition is nicknamed “traffic light”.
2023-10-27 12:35:10
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