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Siemens Energy has been the second-best performing German blue-chip stock in 2025, with its shares more than doubling, but the dramatic recovery has been too slow for some investors who see its struggling wind business weighing down its valuation.
The German producer of gas turbines and power grid equipment, which was forced to turn to a government-backed €15bn rescue package in 2023, has been buoyed by surging energy demand driven by artificial intelligence data centres and electrification.
Shares in Siemens Energy, which fell below €7 in late 2023 amid problems at its wind business, are now trading around €120.
“Even 12 months ago, we would not have imagined that the momentum, in all areas, is as strong as it is today,” Siemens Energy finance chief Maria Ferraro told the Financial Times.
The share surge has allowed it to so far shrug off calls in December from activist investor Ananym Capital to consider a spin-off of its Siemens Gamesa wind business, which it says competes with other units for investment.
Ferraro said the company’s leadership had the “proven track record” to turn around the wind unit, after guiding the gas and grid businesses to growth.
The company wanted Siemens Gamesa to “be a contributor . . . and not dilutive to our business, but that takes time”.
The group’s management had discussed a potential spin-off of Siemens Gamesa before receiving the letter from Ananym. Chief executive Christian Bruch said in November that Gamesa needed to be a “double-digit margin business, otherwise we’re not the right owner”.
Ferraro said Siemens Energy was currently “committed” to its target for the wind unit to break even and reach an operating margin of between 3 and 5 per cent in 2028 as a “minimum”.
Jefferies analyst Lucas Ferhani noted that the energy business was marked by cyclical changes. “Not too long ago people were telling us that [Siemens Energy’s] gas business was not great. And now look at where they are,” he said, pointing to soaring demand.
Management would hope that the market for wind turbines would turn out to be “on their side” in years to come, he added.
Siemens Energy’s order backlog stood at a record €138bn as of September, with the next available delivery slot for one of its large gas turbines in 2029. The group, which made a net loss of €4.6bn at the depth of its crisis in 2023, turned a profit of €1.7bn in the year to September.
The energy company, which had been at the core of the Siemens conglomerate, was spun out in 2020 inheriting a majority stake in the wind power business, Siemens Gamesa.
The stake in the wind engineering and turbine unit was seen at the time as a counterweight to Siemens Energy’s fossil fuel divisions.
However, beset with technical problems, Siemens Gamesa suffered from steep losses. After Siemens Energy delisted the wind unit in 2023 to gain more control over the business, it was forced to fall back on a rescue package owing to a funding crunch.
Siemens Gamesa recorded an operating loss of €1.3bn before special items in the past financial year and is finally expected to break in 2025 after it restarted sales for onshore turbines.
Despite the share rally, Ananym’s letter argued that Siemens Energy still traded at a significant discount to its sum-of-the-parts value as well as its industry peers such as GE Vernova and Mitsubishi Heavy Industries.
Other investors and analysts have said that simply separating out the wind business would not close the valuation gap.
A factor behind the difference was that the concentration of AI data centre investment in the US meant an American company such as GE Vernova had been “quicker to benefit” from the boom, according to one banker.
Ferraro also said that a German company might be perceived differently by investors. “When you look at European companies versus American companies and valuations, you see that there’s a different evaluation,” the finance chief said.
The calls for Siemens Energy to sell the wind unit were understandable while the rest of the business was booming, some analysts said. Jefferies’ Ferhani said that without a path to an operating margin of at least 10 per cent for Siemens Gamesa, “you’re going to get continued pressure to sell the business”.
The banker said the wind industry had a “good future” but the question for investors was “do I want to stay and keep that exposure, or am I too scared about the volatility and Chinese competition?”
Ferraro said that beyond 2028, Siemens Gamesa would need to be “evaluated to ensure it has double-digit potential” in terms of profitability.
However, she showed confidence in Siemens Energy and the wind business to deliver on its targets, saying: “We’re going to continue to execute on this plan as fast as possible.”