FRANKFURT (AFP) – Siemens Energy reported yesterday a record third-quarter net loss after taking a EUR1.6-billion (USD1.7 billion) hit to fix technical problems with its onshore wind turbines.
The group had warned in June that quality issues at its troubled Siemens Gamesa wind unit were worse than previously thought, sending its share plunging more than 30 per cent.
After initially estimating the repair costs at over EUR1 billion, Siemens Energy announced a charge of EUR1.6 billion to resolve the issues affecting “certain rotor blades and main bearings in the 4.X and 5.X platforms”.
The charge weighed heavily on the company’s overall performance in its fiscal third quarter, which slumped to a net loss of EUR2.9 billion. The company had booked a loss of EUR564 million in the same period a year earlier.
The latest result was also dragged lower by extra charges of EUR600 million in its offshore wind business, which has been hit by “higher product costs” and difficulties in ramping up capacity.
Siemens Energy said it was “additionally burdened” by a EUR700 million write-down of deferred tax assets during the quarter. Looking ahead, the group now expects a significantly larger full-year net loss of around EUR4.5 billion, after a loss of EUR712 million last year..
Siemens Energy said it had set up “a special committee for a detailed investigation of the quality and productivity problems at Siemens Gamesa”.
The company plans to give an update on its wind strategy at an investor day in November.
Siemens Energy CEO Christian Bruch nonetheless expressed optimism about the future.
The company saw a jump in orders in the third quarter, with those at the Siemens Gamesa unit alone more than doubling year-on-year. “We believe more than ever in the potential of wind power,” Bruch told reporters during a conference call.
The long-running woes at Gamesa prompted Siemens Energy last year to take full control of the Spanish subsidiary, but a hoped-for turnaround has yet to materialise.
The specific issues plaguing Gamesa come at a challenging time for the wind power sector in general in Europe. Despite growing demand for clean energy, the sector has been battered by higher prices for materials, persistent supply chain disruptions and strong competition from China.
