Siemens Energy has initiated a review of its wind business after taking a large hit to earnings and expected full-year revenues and profits due to problems at its unit Siemens Gamesa, one of the largest wind turbine makers in the world.
“Our third-quarter results demonstrate the challenges in turning around Siemens Gamesa,” Christian Bruch, President and CEO of Siemens Energy AG, said in a statement on the company’s results for the third quarter of the fiscal year 2022/2023 that ended on June 30, 2023.
At the end of June, Siemens Energy withdrew the profit guidance for the company due to problems with wind turbines by Siemens Gamesa.
“This is a disappointing and severe setback,” Siemens Gamesa chief executive Jochen Eickholt told reporters on an ad hoc call then.
In today’s Q3 earnings release, Siemens Energy said that its result before special items was a loss, driven by charges at Siemens Gamesa totaling $2.4 billion (2.2 billion euros). The charges relate mainly to quality issues of certain onshore platforms as well as increased product costs and ramp-up challenges in the offshore business.
“Following a substantial increase in failure rates of certain wind turbine components, an extended technical review suggested that significantly higher costs will be incurred than previously assumed to reach the targeted quality level. The other charges mainly relate to increased product costs and ramp-up challenges in the offshore business,” Siemens Energy said.
“Due to the developments at Siemens Gamesa, Siemens Energy is reviewing the current strategy and action plan in the wind business. Details of this strategic plan will be presented at the Capital Markets Day in November,” the company added.
As a result of the charges and wind turbine issues at Siemens Gamesa, Siemens Energy Group now expects its FY 2022/2023 net loss at $4.94 billion (4.5 billion euros), about four times higher than the previously expected loss. Free cash flow pre-tax is expected up to a negative low triple-digit million euro amount, compared to a previous guidance of positive up to a low triple-digit million euro amount.
By Tsvetana Paraskova for Oilprice.com
