Siemens Energy has received 7.5 billion euros ($8.15 billion) in project-related assurances from the German government, just hours before the company announced a nearly 5 billion euro loss for the fiscal year.
Following discussions with private lenders as well as the company’s largest shareholder, Siemens AG, the German economy ministry declared late Tuesday that it had granted the backstop as part of a larger package of 15 billion euros in guarantee lines agreed with banks and other stakeholders.
Berlin places great importance on Siemens Energy, a spin-off company of the renowned German electronics manufacturer Siemens, helping to facilitate the transition away from fossil fuels.
The bailout highlights the financial challenges that nations face in doing so. 32% of the company that makes wind turbines is owned by Siemens.
The federal government remains “in intensive contact” with Siemens Energy, Siemens, and private lenders, the ministry stated, adding that the agreement to “secure the company” has been in the works for a few weeks.
Along with a wide range of other products, the company, which generated revenue of roughly €29 billion ($32 billion) in its most recent fiscal year, also manufactures gas-powered turbines as well as electrolyzers for the production of hydrogen energy.
Approximately one-sixth of the world’s electricity is produced thanks to its technologies, which support 94,000 jobs across more than 90 countries.
The ministry claims that in order to fulfill its €110 billion ($119 billion) pipeline of orders, it needs the financial guarantees.
Siemens Energy Faces Issues With Wind Turbine Models
Due to a number of issues with the production of some of its wind turbine models this year, Siemen Energy—which produces both conventional along with renewable energy—announced in August that it anticipated reporting a €4.5 billion ($4.9 billion) loss for the current fiscal year.
Following the company’s announcement late last month that it was looking for a government bailout, shares fell nearly 40%, according to Reuters.
Tuesday saw a 3% increase in the company’s stock price after the support package was announced.
German manufacturers, who have suffered to pay for the outrageous price of gas for the last two years, need to find cheaper, cleaner energy sources. The sector has also been negatively impacted by painful interest rate hikes and a faltering Chinese economy.