Siemens Will Shut Solar Unit as It Loses $1 Billion in Two Years

June 18, 2013 Leave a comment

Siemens Will Shut Solar Unit as It Loses $1 Billion in Two Years

Siemens AG (SIE) will close its solar power unit after failing to find a buyer and losing at least 784 million euros ($1 billion).

About 280 workers will be affected by the closure, which will be completed once Munich-based Siemens has finished projects including in Spain, spokesman Torsten Wolf said by telephone. The shuttering will cost a “double-digit million-euro” sum, he said.

It “has become evident that, due to the increasingly difficult market situation, we will not find an investor for this business,” Wolf said. “We had negotiations with a number of interested parties but no agreement could be achieved.”Siemens paid $418 million to acquire Beit Shemesh, Israel-based Solel Solar Systems in 2009 as Chief Executive Officer Peter Loescher sought to replicate the company’s successful expansion into wind-power and win more revenue from the so-called green portfolio. The solar division has posted losses of at least 784 million euros since 2011.

The division was put up for sale Oct. 22 as solar-panel prices declined because of a supply glut and weak demand. The average price for solar cells fell by 75 percent between 2009 and 2012, according to data compiled by Bloomberg Industries.

At the time of the acquisition, Solel had more than 500 employees. Siemens also increased its stake in Italian solar thermal specialist Archimede Solar Energy Srl to 45 percent in 2010.

Siemens will complete unfinished contracts, which include projects in Spain, where it paid 115 million euros in charges in the three months to the end of December for delays in the sector, before finalizing the unit’s closure.

The European Union decided on June 5 to impose a tariff of 11.8 percent on panels from China for allegedly selling them in the 27-nation bloc at less than cost, affecting potentially more than 100 Chinese solar companies. The rate is scheduled to rise to an average of 47.6 percent should Chinese and EU officials fail to resolve the dispute.

Siemens’s shuttering of the solar unit was first reported by Handelsblatt today.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

Filed under Macro Trends

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