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Shares rise 13% after fourfold rise in quarterly group operating profit

Siemens Energy promised a turnaround at its troubled wind turbine business was under way as the company raised its revenue outlook and sought to draw a line under a crisis that has wiped billions from its market value. 

A new chief executive, Vinod Philip, will take charge of wind division Siemens Gamesa in August and will oversee job cuts in order to regain control of costs, the company announced on Wednesday.

Group operating profit rose fourfold, to €170mn, in its second quarter compared with a year previously, and the company raised its full-year revenue growth forecast from 3-7 per cent to 10-12 per cent.

Siemens Energy also said it would resume sales of its two troubled turbine models, the 4.x and 5.x, in the coming months. The suspension of sales for the two platforms — due to widespread engineering defects identified last year — led the company to a €4.6bn loss in 2023 and deepened a funding crisis for its renewable energy project pipeline that triggered a €15bn government bailout.

“The turnaround of our wind business is still our focus. To this end, we are taking steps to reduce complexity and create a more focused business,” said Siemens Energy chief executive Christian Bruch.

Shares in the company, which was spun out from its namesake Siemens, the German engineering giant in 2020, had risen 13 per cent by early afternoon, almost erasing their losses over the past year. Siemens still owns a quarter of the company. 

The group’s robust quarterly results were mainly driven by the performance of its Grid Technologies and Transformation of Industry divisions, but the company said it expects Gamesa to be a major driver of revenue growth in the second half of its financial year.

Gamesa will adopt a more streamlined approach in the future. The company has previously said it hopes to make €400mn of cost cuts at the division, and claimed the restructuring announced on Wednesday was the first “concrete step” towards achieving them. 

“We will not defend each and every market,” Bruch said. 

The company’s turbine business will focus on Europe and the US from now on, it said, with production capacity due to be ramped up at key sites in Denmark, France and Germany. 

Bruch praised outgoing Gamesa chief Jochen Eickholt, who only took over in March 2022, and was not responsible for the problems with the company’s turbines. The division required a “generational change”, Bruch said. 

Siemens Gamesa’s challenges come as the wider wind industry has been under pressure due to rising interest rates and supply chain strains pushing up costs. 

Demand nevertheless remains high. A record 117 gigawatts of new capacity was installed last year, according to a recent report by the Global Wind Energy Council trade group. 

A Ryder analysis shows operating expenses of low-emissions rigs are far higher than those for diesel trucks

Executives at truck leasing company Ryder System spent years listening to some of their biggest customers say they wanted to switch to battery-electric big rigs.

Now that the heavy-duty trucks are available, the company says, few customers want to pay for them.

“The economics just don’t work for most companies,” said Robert Sanchez, the chief executive of Ryder, which manages 250,000 trucks and vans for tens of thousands of retailers and manufacturers.

Ryder’s experience illustrates the challenges facing state and federal governments as they try to push truckers out of heavily polluting diesel rigs and into zero-emissions vehicles. It suggests that truck makers will need to make significant advances in battery weight, range and charging times if battery-electric trucks are to seriously challenge diesel rigs in a highly competitive freight sector that runs on thin margins.

“Quite frankly, demand has not been as strong as what we would like,” said Rakesh Aneja, head of eMobility at Daimler Truck North America, which released its Freightliner eCascadia battery-electric semi truck in 2022.

Aneja said Freightliner eCascadia orders this year are about level with 2023’s orders. That is despite an increasing push from governments, regulators and from companies themselves to lower truck pollution.

Battery-electric trucks cost about three times as much to purchase as a diesel rig. There are federal and state programs to help offset the purchase costs, but operating costs and other issues present big hurdles.

Truckers say battery-electric truck operations are too difficult to set up and too expensive and inefficient to run. It can take years to install on-site charging facilities for trucks that can travel less than half as far as diesel rigs between refueling and that require at least several hours to recharge.

Ryder launched a dedicated service a year ago to help companies set up and run battery-powered fleets, including installation of charging equipment and maintenance of the vehicles.

Ryder says that so far it has sold just 60 vehicles through the program and that most of those are light-duty trucks. It says three companies are running battery-electric heavy-duty trucks, but those five vehicles are only being used in yards to shuttle trailers between parking spots and loading docks.

Sanchez said that unlike passenger-vehicle owners who might buy an electric car on principle, companies will only switch to battery technology when it can compete with diesel on the cost of running the vehicle.

Heavier costs

Ryder, using load and route data from 13,000 vehicles it operates on behalf of customers, recently analyzed the annual operating expenses of battery-electric commercial trucks and found sharply higher costs compared with traditional, diesel-powered rigs.

The analysis assumed the infrastructure to provide fast charging was already in place and focused on expenses such as buying the vehicle, maintenance, labor and fuel.

The company found that light-duty, battery-electric vans raise annual operating costs by several percentage points. As trucks get heavier the cost difference becomes more pronounced, according to Ryder’s analysis, with annual costs of operating battery-electric big rigs about twice as expensive as diesel trucks.

“What surprised us was the magnitude of the gap,” Sanchez said.

The costs differ from state to state because of differences in average wages, fuel and power prices.

The Ryder analysis found that converting a typical mixed fleet of 25 commercial vehicles, including about 10 heavy-duty trucks, from diesel to battery power in California would raise a fleet’s annual operating costs 56%, or $3.4 million a year. The same transition in Georgia would raise annual operating costs 67%, or $3.7 million.

In all, Ryder said, the higher operating costs would add 0.5% to 1% to inflation. “Even if it was in one state, you’re going to be pushing the cost of transportation within that state up,” Sanchez said.

Proponents of battery-electric trucks say they are more cost-efficient than diesel trucks over time because they have fewer moving parts than an internal combustion engine and require less maintenance and repair. Some trucking companies say battery-electric trucks haven’t been on the road long enough to test those assertions.

Saving on fuel

The battery-electric trucks also save on fuel costs in many parts of the country, with savings varying based on the cost of diesel in a state and on the time of day when the vehicle is charged because of shifting costs for electricity.

Because battery-electric trucks are heavier than diesel trucks and require several hours to recharge, companies need more vehicles and drivers to haul the same volume of freight as a diesel truck. The Ryder analysis estimated that a company would need nearly two battery-electric big rigs and more than two drivers to equal the output of a single heavy-duty diesel truck.

Other operating issues are also cropping up as the big rigs get on the roads.

Penske Truck Leasing, which is running pilot programs with battery-electric trucks, has found that because battery-electric rigs are heavier than diesel trucks their tires wear out faster. The company has also found some maintenance costs are more expensive than diesel trucks because parts are rarer and so more expensive.

Paul Rosa, senior vice president of procurement and fleet planning at Penske Truck Leasing, said there is still great interest in zero-emissions vehicles. But while a few years ago customers were pushing to transition to battery-electric trucks “right away,” now they are looking to slow down.

Trucking executives expect that technological advances, such as smaller, lighter batteries that provide greater range between charges, eventually will bring down costs. In the meantime, some state and federal governments are enacting regulations that push truckers into the vehicles.

The U.S. Environmental Protection Agency recently released a rule effectively mandating that manufacturers sell more battery-electric trucks by the end of the decade. California has introduced several regulations that push truckers and fleets into zero-emissions vehicles.

Local and national trade groups oppose the rules and regulations.

“Considering that 96% of U.S. trucking companies operate 10 or fewer trucks, these mandates are simply cost-prohibitive for most truckers,” the American Trucking Associations said earlier this month.

Obesity researchers and companies turn toward helping people maintain losses

Aida Diaz sat down at a long table laden with fried chicken, french fries, salad and more.

Pick what you want for dinner, researchers at Columbia University instructed the 27-year-old New Yorker. Diaz filled her plate with salad, a bit of canned tuna, and chicken, grilled, not fried.

Then she grabbed a fry—because who can resist?—and a couple of spoonfuls of mac and cheese. “They said this is the hardest part,” said Diaz, who is trying to keep more than 35 pounds off.

It sure is. Researchers including the team at Columbia and drugmakers are trying to solve the biggest problem in the weight-loss industry today: how to keep weight off once you lose it.

Hundreds of thousands of people have shed tons of weight on blockbuster drugs including Ozempic and Wegovy. But many put the pounds back on when they stop taking the medications. Millions of others like Diaz who lost weight by changing their diets and exercise habits struggle not to regain.

Drugs or procedures to keep weight off could fuel an even bigger bonanza than Ozempic and its immensely profitable cousins. Losing weight is temporary, but maintaining it is lifelong. Maintaining weight is also a different challenge from losing it.

Makers of the weight-loss juggernauts have a big problem to overcome: Many people stop taking so-called GLP-1 drugs. Their insurers won’t pay for the drugs, they can’t tolerate side effects, or they don’t want to take medication long term. Only 14% of people surveyed in 2023 by KFF, the health-policy research organization, were interested in taking a weight-loss drug once they were told they might gain weight back if they stopped.

“The unmet need has shifted from how do you lose weight to how do you keep it off,” said Dr. Harith Rajagopalan, chief executive officer of Fractyl Health, a Burlington, Mass., biotech company working on two therapies to help people keep weight off.

New treatments

Drugmakers are designing treatments to help people maintain weight, as well as weight-loss pills or long-acting injections that might be easier for patients to use than current injectables. The biotech company Amgen is testing a long-acting injectable that helped people keep weight off for up to five months after they stopped taking it in an early study.

Novo Nordisk and Eli Lilly say their drugs Wegovy and Zepbound, respectively, are meant for weight loss and maintenance. Eli Lilly expects results in 2026 from a study of Zepbound specifically for weight maintenance. Obesity is a chronic disease—such as hypertension—that requires ongoing treatment, according to Novo Nordisk, Eli Lilly and obesity doctors. Patients trying to maintain weight loss often switch to a lower dose.

In March 2023, Karsten Reiners underwent an endoscopic procedure developed by Fractyl Health to treat obesity and Type 2 diabetes. The procedure, approved in Europe and under study in the U.S. for diabetes treatment, removes a lining in the small intestine impaired by chronic exposure to high-fat or high-sugar diets. Sloughing it off allows a new lining to form, restoring normal nerve and hormone signals between the gut and the brain and reducing hunger, Rajagopalan said.

Reiners, a 62-year-old salesman in Krefeld, Germany, lost more than 30 pounds over the following three months. His blood-sugar levels are under control now. He hasn’t had pizza in a year and avoids chocolate. “I do not eat as much as before,” he said.

Still, he has battled food temptations during holidays, and has put back on about 12 pounds.

Fractyl Health plans to launch a study of the procedure for weight maintenance in the U.S. this year. The company is also developing a one-time gene therapy for weight maintenance.

Researchers at Columbia, Drexel University, the University of Pennsylvania and other institutions are conducting a study of the brains, fat and muscle cells and eating patterns of people—such as Diaz—trying to maintain new body sizes. They hope their work, funded by the National Institutes of Health, will lead to personalized treatments.

While the researchers know generally what causes people to regain—the body thinks it is starving after losing weight—they want to understand why some people can keep it off while most can’t.

There is more at stake than looking better. If people put weight back on, they won’t reap the long-term health benefits that losing pounds provides. “Weight regain is the major problem at this point because it really impacts the long-term success medically or otherwise of weight loss,” said Dr. Rudolph Leibel, a researcher on the genetics and physiology of obesity at Columbia, and a study investigator.

Losing weight and keeping it off are metabolically different states, potentially requiring different treatments, Leibel said. He believes the study findings could help people who have lost weight either with drugs or diet and exercise.

The body is designed to fight weight loss, an ancient survival mechanism, Leibel said. When people lose weight, their drive to eat and restore body fat grows. At the same time, they burn fewer calories, because their metabolisms slow in response to weight loss.

“It’s like a perfect storm for weight regain,” Leibel said.

Patients who stopped taking Wegovy or Zepbound gained back more than half the weight they lost within a year. A group of contestants on the TV show “The Biggest Loser” put back, on average, two-thirds of their weight within six years, though some didn’t regain any weight.

More than 10,000 people participate in a long-running study known as the National Weight Control Registry. They follow diets lower in calories and exercise regularly. More than 87% kept off at least 10% of their body weight for 10 years in an analysis of one group of participants.

Maintaining weight loss is challenging in an environment of high-calorie foods and sedentary lifestyles, said Graham Thomas, a registry co-investigator and a professor of psychiatry and human behavior at Brown University. “It’s about learning to live in our environment in a way that people are comfortable with and can tolerate,” he said.

One participant, Heidi Underwood, has maintained a 125-pound weight loss for about six years. The 53-year-old accountant in Saratoga Springs, N.Y., had lost and regained several times. This time she didn’t set a goal and made lifestyle changes gradually.

She started walking regularly, then took up running, rowing and strength training. She cut back on convenience foods, cookies and doughnuts but didn’t ban them, and started eating more lean protein and vegetables. She came to evaluate foods not on whether they were bad or good but rather on what she was getting for the calories.

“I discovered if I made a small change and mastered it, I could keep going,” Underwood said.

Weight trackers

In the new NIH-funded study, researchers are gathering reams of data as Diaz and other participants lose weight, then try to maintain it over 12 months.

Diaz has tried many fad diets since she was a teen, but could never stick to them. She didn’t want to lose weight with an Ozempic-like drug. She enrolled in August 2023 in the study, which first helps participants lose weight with changes in nutrition and exercise. She felt the lifestyle changes were more doable than the extreme ones she had tried before.

By March, Diaz had lost about 15% of her body weight. That was more than enough to move on to the weight-maintenance phase of the study.

Over two days, Diaz underwent a battery of tests at Columbia University Irving Medical Center. Researchers extracted fat and muscle cells, measured her body fat, and took a functional MRI—consisting of images of her brain as she looked at photos of food and decided what to eat. They want to see if activity in specific regions of the brain changes over time in ways that influence food intake.

The researchers laid out comestibles with a total of 10,000 calories on a big table and stepped into a hallway to watch Diaz on video from an iPhone rigged up on a wall behind her chair in the tiny room. Their goal was to see what and how much she ate and how it relates to her weight-maintenance efforts.

Hungry after a long day of tests, Diaz dug in. The smell of the fries and the array of so many foods tempted her. But she tried to stick to what she had learned losing weight: controlling portions and eating more greens and less sugar and fat.

She picked up a bottle of Snapple, looked at the label, then put it back. It wasn’t a diet version. She chose bottled water instead.

Diaz ate her fill in about 20 minutes, including a few fries, more spoonfuls of mac and cheese and a Munchkin along with fruit for dessert. “I’m a sucker for Munchkins,” she said.

She hasn’t sworn off any foods; she just limits how much of them she eats. “It’s learning your body and having a healthier relationship with food,” she said.

Diaz is determined not to regain weight, and wants to lose more. Her tastes and social life have changed, she said. She used to sit with friends over food; now they go on walks or biking.

“I’ve kind of been telling my friends and everybody in my life, it’s not that I’m on a diet or that I’m trying to lose weight for a specific event,” she said. “This is my life now.”

The financial aid involves cheaper state loans and tax incentives

South Korea is dedicating around $7 billion to help wean its electric-vehicle battery supply chain away from China and align more with U.S. trade guidelines.

The Ministry of Trade, Industry and Energy in Seoul said Wednesday that it will provide 9.700 trillion won ($7.14 billion) in state financing to the local EV-battery industry this year to build up the country’s supply chain to continue to benefit from U.S. rules.

The financial aid, which involves cheaper state loans and tax incentives, will help local EV-battery makers source critical minerals from the U.S. and U.S. free-trade partners. The money is also aimed at supporting the development of lithium-metal batteries or alternatives to replace graphite, a key battery ingredient, the ministry said.

The move comes as South Korean EV makers and battery suppliers look to meet complex U.S. rules that take a tougher stance on Chinese manufacturers in the industry. One of the rules’ focus regards U.S. tax credits, which won’t be given to makers of cars that use critical minerals that come from China.

Carmakers breathed a sigh of relief when Washington decided earlier this month to allow them to use Chinese graphite until 2026 but give them until 2027 to source key materials like graphite from outside of China, in order to be eligible for the tax credit.

When Korea’s trade minister, Ahn Duk-geun, met with local EV companies and battery makers on Wednesday, he said they had earned “two years of precious time” to diversify their supply chains for graphite and other critical battery minerals, according to the ministry statement.

The Biden administration’s Inflation Reduction Act stipulates that no U.S. tax benefits be given to electric vehicles or EV batteries with critical minerals from “foreign entities of concern”—a term that largely refers to China, which dominates the global supply of graphite.