The AGM of Siemens Gamesa on Friday lasted only two hours.
The major shareholder Iberdrola with a stake of 8% tried to strengthen the minority rights. Siemens, the majority shareholder with a stake of 59%, however, did not support the two proposals of Iberdrola.
Markus Tacke, the CEO of the company, emphasised the company´s commitment to Spain and the headquarters in Zamudio.
The company has around 4,500 employers, 15 factories and 3 R&D centres located in Spain.
This statement, however, will make it difficult to restructure the business in Spain.
The cost reduction target will reach €2bn up to 2020 with the focus on product affordability (streamlining the product portfolio), operations (increase production in lower-cost countries) and SG&A (consolidation of regional headquarters, workforce optimisation and offshoring in R&D).
In the onshore business, the company produces geared turbines with 25 variants which should be reduced to 9.
This portfolio streamlining will definitely have an impact on the workforce in Spain with its 15 factories.
In addition, the average selling price in the order intake declined further, although management saw the first signs of stabilisation in the first quarter of 2018.
Prices will remain under pressure, mainly attributable to the introduction of auction systems. Consequently, the workforce has to be reduced in Spain. Therefore we expect the conflict between Iberdrola and Siemens to continue.
To date, we are not quite certain whether Iberdrola is interested in avoiding lay-offs in Spain or just trying to cash in the money promised in the merger agreement.
Founded in 2007, AlphaValue has become the world’s leading provider of Independent European Equity and Credit Research. We provide comprehensive, unconflicted research-only (no execution) coverage of c. 480 European mid and large cap stocks. We have an average of 46% of negative recommendations at any one time. Learn more at www.alphavalue.com