Shares of Siemens Energy, a conglomerate specializing in energy solutions, saw a significant drop of as much as 7% in volatile trade on Monday. The company issued a warning regarding an anticipated annual loss of €4.5 billion ($4.95 billion), primarily attributable to difficulties within its wind-turbine division.
Siemens Energy disclosed that it has identified increased failure rates for components of its onshore wind turbines, while struggling to enhance the productivity of its offshore turbines. Consequently, the company has revised its margin guidance to a range as low as -10%, down from the initially expected positive margin of 1% to 3%. Additionally, Siemens Energy adjusted its comparable revenue projections to grow between 9% and 11%, compared to the previous guidance of 10% to 12%.
During the fiscal third quarter, Siemens Energy suffered a loss of €2.93 billion, a significant increase from the €564 million loss reported in the same quarter last year. However, the company’s revenue displayed an encouraging growth of 8% to reach €7.51 billion, while orders experienced a remarkable surge of 54%. Analysts noted that Siemens Energy’s gas and power divisions performed well amidst these challenges.
Siemens Gamesa, a subsidiary responsible for manufacturing wind turbines, recorded a substantial independent loss of €2.56 billion, exceeding the estimated loss of €1.55 billion. This significant loss was attributed to charges of €1.6 billion in its onshore wind division and €600 million related to increased product costs and challenges in the offshore business.
Despite these setbacks, Siemens Gamesa CEO Jochen Eickholt expressed some optimism during a conference call, stating, “Whilst I’m very disappointed that we are experiencing these issues, I’m pleased with the fact that, in most cases, we recognized them well before our customers became aware of the issues.”
However, Bernstein analyst Nicholas Green raised concerns about the company’s ability to fully address and resolve these ongoing issues. He questioned whether investors could have confidence that future turbines would not encounter similar problems or face operational challenges after passing initial inspections.
Siemens, which holds approximately one-third of Siemens Energy shares, previously agreed to acquire the remaining stake in Siemens Gamesa last year. Consequently, Gamesa was delisted in February.
Despite the challenges faced by Siemens Energy and Siemens Gamesa, both companies continue to be instrumental players in the energy sector, striving to overcome their current obstacles and pave the way for future growth and success.
