If you want to understand what is going wrong with a company, you often have to go back to the starting point. Regarding the IPO of Siemens Energy, Supervisory Board Chairman Joe Kaeser said in December 2019 that the entire “value creation potential” of the former energy division of the major Siemens corporation could now finally be leveraged. And CEO Christian Bruch was quoted as saying that the new company’s “biggest hope” was the Spanish wind power subsidiary Gamesa. Today we know: Siemens Energy has not created any value in the last four years, but has destroyed huge amounts of value. And the great hope turns out to be a completely hopeless permanent construction site month after month. The company can only continue its business with billions in government guarantees, as was finally confirmed on Monday.
Siemens Energy suffers from Bayer syndrome. For the chemical company, it was the purchase of the seed giant Monsanto that turned into a disaster. The energy company’s (gradual) takeover of its competitor Gamesa, which ended in disaster. Entrepreneurial mistakes of the greatest magnitude that may no longer be correctable at all – or can only be corrected through a brutal split of the two companies.
And there is another similarity that connects the two very different companies. It was the chairmen of the two supervisory boards who must be named as the people actually responsible for all of today’s misery: Werner Wenning at Bayer, who for long periods became an accomplice to his wild CEO instead of controlling him; and Joe Kaeser at Siemens Energy, who was celebrated as the architect of the entire structure. Wenning at least drew the conclusions and resigned early when the disaster could no longer be denied. At Kaeser we are still waiting for it.
The billions from the banks and the state (and the rather modest contribution from the former parent company Siemens) cannot cure the syndrome. Oxygen is given so that the patient survives. But the company can only recover with radical surgery. And there isn’t much time left for that because the company continues to destroy capital. And the worst thing for the original shareholders is that they will never see their money at Siemens Energy again, even if their company actually undergoes a radical treatment.
The hope that things will eventually work out at Siemens Energy after many unsuccessful attempts rests on many shaky assumptions. The wind power market is one of the most competitive industries in the world. Even the best companies are currently making little money. Chinese manufacturers undercut their competitors with prices that they can only offer through cheap financing from their state banks. In such an environment, sooner or later there will be another hard market shakeout. The dogs then bite the last one. And that could be Siemens Energy.
This article was first published by our colleagues at CAPITAL
