You can also snub others by praising them in the highest tones first. This is what Christian Bruch, boss of the energy supplier Siemens Energy, did on Wednesday morning. The traditional power plant division is “on track,” he said. And: “The team is doing a great job and delivering great results.” Too bad for congratulating the boss.
This is the page. The other is the manufacturer of wind turbines Siemens Gamesa, two-thirds owned by Siemens Energy. Sustainable, green, the ideal company of the future for the energy transition in the years to come, makes it a figurehead of Siemens Energy. Proof that you can not only make gas turbines and coal-fired power plants, but also have the future under control. He should actually be humming here.
Instead, the second earnings warning came shortly after in mid-July Gamesa stock lost around 15% in one day, billions of market capital being burned. Or else, gone with the wind. The drama now explodes to the mother in Germany, during the last third quarter of activity from April to June, the whole group made a loss of 307 million euros and now expects red figures for the whole year.
Good results ? Good work? Good team?
“It’s extremely boring,” says Bruch, the boss of Siemens Energy. And specifies: “I am not satisfied either with the transparency and the predictability of the results of the project. Since the Siemens wind division merged with the Spanish company Gamesa four years ago and the whole Spanish construction has been working, there have apparently been endless problems. Local management has been “completely overhauled” over the past twelve months, says Bruch. “They’re tackling the issues. But honestly, it’s not fast enough and consistent enough for me.” It’s a conference call this Wednesday morning, and that means: the only thing you see are some graphics on the network. We would have liked to see more. For example, the face of Bruch when he repeats for an hour what he lacks in the Spanish subsidiary: transparency.
The misery is explained by the high prices of raw materials and the projects of wind turbines on land, in the zone known as onshore. At the moment, things are not going well as the new generation of 5.X wind turbines ramp up. Problems which are all so serious that they are dragging the bargains associated with conventional energy production into the red. On the other hand, things are going well with offshore wind turbines, these plants which are on the high seas and where the group is the world market leader. When Siemens and Gamesa merged their wind operations, offshore wind turbines entered the relationship mainly on the German side.
But there are other issues as well. For example, that Siemens Gamesa with its renewable energies is not only a subsidiary of Siemens Energy, but also an independent listed company. This in turn means: the boss of Siemens Energy may be annoyed. But its possibilities are limited and its influence on the supervisory board is limited. The Spaniards are “proud Basques”, they say in industrial circles, and Gamesa is far away. It is not that easy to step in and move your strategy forward. In addition, they want to spare themselves additional German-Spanish cultural battles. Buying the store completely off the stock exchange and integrating it would be an option. When everything is yours, the question of proximity and distance no longer arises. But it would cost billions and it’s not as easy as it sounds.
Open detailed view
Christian Bruch, CEO of Siemens Energy at the IPO in September 2020. In the meantime, the group has climbed to Dax.
(Photo: Frank Rumpenhorst / dpa)
The chain from Germany to Spain is long. It all started when the Siemens group listed its energy division under the name Siemens Energy on the stock exchange last September. Here too: the German-Spanish wind turbine manufacturer Siemens Gamesa. At least since the group with its 91,000 employees worldwide, including 26,000 in Germany, was promoted to Dax last March, investors are paying close attention. Siemens Energy had in fact forecast an operating return on sales of three to five percent. Bruch now counts only “two to less than three percent”.
How to manage the important stake in Spain which draws you in the red? Andreas Nauen has been the head of Siemens Gamesa since last year. Two profit warnings are now in its mandate, and one unofficial law in the industry is: three of them and it’s over.
The pressure is on, but it’s probably not that far yet. Nauen is still allowed to keep his job. But that has more to do with the fact that the boss of Energy Bruch doesn’t feel like remaking great personalities after just a few months. Quick changes of direction aren’t always the solution, he says. Instead, he wants to “rework” the issues with management. In industry circles, it was recently said that it “is slowly getting tight for Nauen”. He couldn’t “afford” another profit warning. Nauen, the man at the head of Siemens Gamesa, has a few months left and it looks like this will be the last chance.