(new: details, analysts, share price)

MUNICH (dpa-AFX) - The ailing energy technology group Siemens Energy is slowly getting back on track. The Munich-based company is benefiting from a significant increase in demand in the electricity market. The grid business in particular is growing rapidly. After a better than expected second quarter, the company, which had lost confidence on the stock market in the past due to numerous profit warnings, raised its forecast for the current fiscal year.

A far-reaching restructuring plan was also presented for the loss-making Siemens Gamesa wind business, which is intended to get the turbine manufacturer back into the black. However, this will take years. The plan includes capacity adjustments and job cuts in the land turbine business. Siemens Energy also surprised with a change in management at Gamesa: CEO Jochen Eickholt, who is largely responsible for the restructuring program, will leave at the end of the year. Siemens Energy justified this with a "generational change".

The Siemens Energy share, which has been badly shaken in recent years, recorded a jump in price on Wednesday. With an increase of 12 percent to more than 22 euros, the stock topped the list of winners in the leading Dax index in the morning. The share price has made up a good part of its losses this year: the share has gained more than 80 percent in the current year. For the past 12 months, the share price is still down slightly by 3.5 percent. Over three years, the share has lost a good 16% in value.

In the second half of 2023, the Siemens Energy share price fell significantly, mainly due to Gamesa. In June of last year, the share price was still just above the level it has now reached again, but by the end of October it had plummeted to a record low of just €6.40. Since then, the share price has more than tripled again.

After the numerous profit warnings recently issued, the company is now sending out better news again, according to the market. For Akash Gupta from the US bank JPMorgan, the biggest positive surprise was that the company is now expecting a clearly positive cash inflow for the year as a whole. Jefferies expert Simon Toennessen was also impressed. In the second quarter, the inflow of funds and incoming orders were strong and the figures were better than expected overall. Following the forecast increase, UBS analyst Supriya Subramanian now assumes that the market's profit expectations are likely to rise in the mid to high single-digit percentage range.

Berenberg expert Philip Buller also noted that there had been no further bad news at Siemens Gamesa, even if the figures were still poor. He also referred to the wind turbine manufacturer's restructuring plan and the announced return to sales of the 4.X and 5.X land turbines. He described the change of CEO at Gamesa as "sensible", which in his opinion came a year earlier than planned. However, this should be well received. His successor Vinod Philip, previously responsible for central functions and significantly involved in the integration of Gamesa, was a good choice.

The development in the second quarter of the financial year "reflects the continued strong demand for our energy transition technology as well as initial successes in stabilizing the wind business", said Group CEO Christian Bruch. The Group benefited in particular from strong grid business. Instead of 3 to 7 percent, sales in 2023/24 (as of the end of September) are now expected to grow by 10 to 12 percent on a comparable basis - a difference in the billions. This excludes currency and portfolio effects.

Management has raised the lower end of the range for the operating margin before special items and expects it to be between minus one and plus one percent. Previously, Siemens Energy had assumed a worst-case scenario of minus two percent. The company was also much more optimistic about the cash inflow after taxes.

In the second quarter, Siemens Energy achieved comparable sales growth of 3.7 percent to around 8.3 billion euros. In contrast, order intake fell by 22 percent on a comparable basis to 9.5 billion euros. This was primarily due to a lack of orders from Siemens Gamesa, where sales of certain land turbines are currently still suspended due to quality defects. Bruch announced that sales of the affected turbines will be resumed at the end of the financial year (4.X) or 2025 (5.X).

The adjusted operating result increased from 41 million to 170 million euros. The grid business recorded a jump in profits. After taxes, Siemens Energy earned 108 million euros, with the company also benefiting from the sale of business units. In the previous year, the company had posted a loss of 189 million euros.

The struggling wind subsidiary Gamesa continued to post losses, but these were not as high as analysts had expected. On Wednesday, the company launched a comprehensive package of measures aimed at returning Gamesa to profitability by 2026. There will be a change at the top of the wind turbine manufacturer: Jochen Eickholt will hand over the CEO position to Vinod Philip on August 1 and will leave on September 30 after a transition phase. The 62-year-old took the helm at the loss-making wind subsidiary around two years ago.

"In a very difficult situation at Siemens Gamesa, Jochen laid the key foundations for the urgently needed restructuring and new start within Siemens Energy," said Bruch. Now that the multi-year restructuring plan has been implemented, the time has come for a generational change at Gamesa.

Gamesa will remain in the business with both land turbines (onshore) and marine turbines (offshore), Siemens Energy announced. The onshore business, which has been in crisis for years, will in future concentrate on the core markets of Europe and the USA, explained Bruch. Other local markets would only be served in new business if this "makes economic sense in the respective case". In this context, Siemens Gamesa intends to reduce capacities. In offshore, on the other hand, the Siemens Energy subsidiary will continue to concentrate on ramping up its capacities. Gamesa also intends to combine the responsibilities for the new turbine and service business in future.

In addition, a new organizational model will eliminate hierarchical levels, among other things. This will also entail job cuts. Gamesa intends to absorb as many of the planned job cuts in the affected areas as possible through internal job transfers. The exact impact of the job cuts, including on individual countries and locations, cannot yet be quantified. In the course of the change of CEO, Eickholt and Philip will finalize the individual measures in the coming weeks and discuss and negotiate them with the respective employee representatives over the next few months. "Gamesa will take time," Bruch made clear./nas/lew/stk