Danish wind turbine manufacturer Vestas should be able to capitalize on the major challenges faced by rival Siemens Gamesa, says Jacob Pedersen, head of equity research at Danish bank Sydbank, after Siemens Energy’s annual report, which reported a loss of EUR 4.3bn in its wind division, Siemens Gamesa.

”I note that Siemens Gamesa expects a loss of EUR 2bn in the new financial year, and that they do not expect to reach breakeven until 2026. We know that Vestas is sticking to their target of a 10% operating margin in 2025 - Siemens Gamesa is lagging far behind.”

”Siemens Gamesa is talking about reducing its product catalogue and the markets it operates in. This is something that Vestas should utilise,” Pedersen tells MarketWire.

Siemens Energy writes in its financial statements that it suffered an unexpected, serious setback in the past year. Provisions for quality issues in the onshore business, increased product costs and ramp-up challenges in the offshore business heavily impacted the result and will continue to impact the group’s profitability in the short to medium term, it says.

Siemens Gamesa has still suspended commercial activities on its 5.X platform consisting of onshore turbines. This leaves extra space in the onshore wind turbine market for Vestas and other rivals.

”The only negative thing for Vestas in this report is the price development for onshore wind turbines, which is completely collapsing. Siemens Gamesa is down to EUR 0.70m per megawatt for onshore wind turbine orders, but this is probably very company-specific,” says Pedersen.

The challenges at Siemens Energy have been so great that the German government has come to the rescue with a state guarantee of EUR 7.5bn.

For a state to help a selected industry in this way is, according to Pedersen, ”where we are heading”.

”I don’t think it’s something we can get around. It may well be that someone at Vestas says that this is unfair, but then Vestas must work to get the political backing and support in relation to where Vestas is,” says Jacob Pedersen.

In relation to potential competition issues with state aid, he is convinced that a softening of the situation is underway.

”With everything we see in relation to the Chinese, who are coming in and who we have to try to keep out - supported by the Chinese government - and what is happening in the US with the Inflation Reduction Act, we also have to do something in Europe,” says Pedersen.