Siemens Energy has announced a significant turnaround, reporting an annual profit exceeding €1 billion. This news comes as the company begins to recover from challenges faced by its wind turbine division, leading to a surge in its stock prices by as much as 20% on Wednesday.
The German energy technology company shared a net income of €1.3 billion for the fiscal year ending in September, bouncing back from a substantial €4.6 billion loss the previous year. This loss was primarily due to technical issues with some of Siemens Energy’s turbines, which required a €15 billion government-supported bailout.
While CEO Christian Bruch noted that the company hasn’t entirely overcome the wind turbine crisis, he expressed optimism, stating that no new technical problems in the turbines have been discovered and acknowledging that “we have achieved everything we wanted to in 2024.” However, he warned that addressing quality concerns will continue to require considerable effort.
Following the announcement, Siemens Energy’s shares climbed early in the trading day before experiencing some fluctuations, ultimately closing the day nearly 19% higher in Frankfurt.
In addition to celebrating its recent success, Siemens Energy adjusted its medium-term earnings outlook, increasing its profit margin target for the fiscal year 2028 from a minimum of 8% to a range of 10% to 12%. This optimistic forecast is fueled by a surge in orders for its gas turbines, power transformers, and solutions aimed at helping businesses transition to greener practices.
The wind turbine division, despite reporting a loss of €472 million, showed signs of improvement compared to the previous year’s loss of €670 million, attributed to higher project costs associated with the known quality issues.
Bruch also addressed potential impacts on the business related to former President Donald Trump’s expected re-election, especially concerning offshore wind projects. Siemens Energy invested $500 million last year in U.S. manufacturing facilities, and Bruch assured that current American offshore wind projects under construction would likely stay secure, although future projects planned for 2029 and beyond may face uncertainties.
He mentioned, “What does it mean for tax credits? We’ll have to wait and see,” highlighting the uncertainty surrounding the future of incentives like the generous tax credits from President Biden’s Inflation Reduction Act.
The comments come amid broader concerns in the renewable energy sector, as companies like RWE have started to scale back their investments significantly. Deutsche Bank analyst Gael de-Bray noted that despite a 60% rise in Siemens Energy shares over the past three months, there remains substantial potential for growth, recommending the company’s stock as a buy.