Germany’s Federal government is providing the facility of a safety net to Siemens Energy to help counter a huge energy technology order backlog – possibly Europe’s largest such backlog. The offer follows the company’s reporting a net loss of €4.5 billion for the 2023 fiscal year, alongside an order backlog of €112 billion ($121.6 billion).
The guarantee is worth €7.5 as part of a guarantee structure between the company and its partners. Officially announced during the company’s Q4 media briefing, the financing was agreed upon to re-insure the prominent technology company.
“The demand for our technologies and products is huge,” said Siemens Energy chief executive Christian Bruch. “Our backlog is €112 billion. It is industry practice to offer guarantees to ensure potential customer requirements are met. These serve to protect down payment, performance or warranty claims. It is not a loan” he stressed, adding “It is important to be able to cover our huge incoming orders, in particular the wind area.
“Our backlog is so high, the minister for justice actually referred to it as ‘clump risk’, because we have the largest backlog in energy technology in Europe.”
Under the agreement, Siemens Energy will receive a €12 billion guarantee line from the banking consortium, with Berlin’s €7.5 billion counter guarantee provided to the banks in order to ensure the guarantee line is successful.
Financial statement
According to a Siemens Energy statement, although the company has seen a success of 70% of its businesses within the 2023 financial year, that success has been offset by continued difficulties with its wind business. Charges for quality issues in the onshore business, increased product costs and ramp-up challenges in the offshore business have severely impacted its financial results and will continue to impact the group’s profitability in the near to mid-term.
Additionally, break-even at Siemens Gamesa, initially expected for 2024, is now expected in fiscal year 2026.
These setbacks by necessitate a review of the company’s strategies in the wind areas. This would include reviewing which products the company will be using and selling, which are long term profitable markets, and how it can further optimise and reduce costs.
“The industry is currently at a watershed moment, many things are being paused, many wind projects are being paused. We need adjustments and tender condition and requirements if we want to expand wind energy generation fast” commented Mr Bruch.
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