Three of the world's largest wind energy companies face a difficult year

Three of the largest companies focused on wind energy face a difficult year. Germany's Siemens Energy expects to post a loss despite solid results at the end of last year, while Danish company Vestas has proposed paying no dividend this year. Another Danish company, Ørsted, is planning layoffs in addition to suspending dividends for the 2023 to 2025 financial years. The companies announced the news in their earnings reports. Their performance reflects ongoing problems in the sector, including project delays, equipment issues and the effects of inflation, Reuters reported.

Siemens Energy, the world's largest manufacturer of offshore wind turbines, expects its Siemens Gamesa division to post a loss of approximately two billion euros (CZK 50 billion) this year, before exceptional items. Quality problems with some models designed for onshore use have plunged the division into crisis. Chief Executive Christian Bruch said that while the energy sector as a whole has strong fundamentals, the pace at which grids and renewable energy are being expanded remains insufficient.

In the first quarter of its financial year, however, Siemens Energy reported a net profit of 1.58 billion euros, thanks to exceptional income, compared with a loss of 598 million euros a year earlier. Excluding exceptional items, profit was 208 million euros, a marked improvement on the loss of 282 million euros in the same period the previous year. That loss was caused by problems in the Siemens Gamesa division.

According to Bruch, the current construction of wind farms, particularly in China, has put the world on course to increase global renewable energy capacity two-and-a-half-fold by 2030. This falls short of the goal of tripling it, agreed at last year's COP28 climate conference in Dubai. In addition, rising prices for raw materials and components, as well as delays in issuing regulations, have led to write-downs and losses across the sector, despite strong demand for renewable energy technologies.

Anders Schelde, chief investment officer at Danish pension fund AkademikerPension, said that market conditions for offshore wind farms need to change for the sector to become profitable again.

Danish company Vestas, a leading global manufacturer of wind turbines, returned to operating profit in the final quarter of last year. It has decided, however, to suspend dividend payments, and its chief executive warned that the sector will continue to face challenges this year.

Ørsted announced a portfolio review and layoffs after taking large write-downs due to project delays in the United States. The company said it aims to reduce fixed costs by one billion Danish kroner (CZK 3.35 billion) by 2026, which would involve cutting 600 to 800 jobs worldwide. Around 250 employees are expected to be laid off this year as part of the review.

„To improve our competitiveness, ensure value creation and make sure we can attract capital into renewables, we will make Ørsted a leaner and more efficient company,“ said Chief Executive Mads Nipper.

The Danish Ministry of Finance said Ørsted's decision to suspend dividend payments will leave a shortfall of 9.8 billion Danish kroner (nearly CZK 33 billion) in the budget between 2024 and 2026. The state owns a 50.1 percent stake in Ørsted.

Siemens Energy shares were up more than one percent on the Frankfurt Stock Exchange in the afternoon, at 14.50 euros. Vestas shares had gained more than six percent and were trading at nearly 200 Danish kroner. Shares in Ørsted, the world's largest developer of offshore wind projects, were down around two percent at 378 Danish kroner.