Frankfurt, Germany – Siemens Energy reported Monday a record third-quarter net loss after taking a 1.6-billion euro ($1.7 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 percent.
After initially estimating the repair costs at over a billion euros, Siemens Energy announced a charge of 1.6 billion euros 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 2.9 billion euros. The company had booked a loss of 564 million euros in the same period a year earlier.
The latest result was also dragged lower by extra charges of 600 million euros 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 700-million-euro write-down of deferred tax assets during the quarter.
Looking ahead, the group now expects a significantly larger full-year net loss of around 4.5 billion euros ($4.94bn), after a loss of 712 million euros last year..
CEO expresses optimism –
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 materialize.
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.
Siemens Energy was the biggest faller on Germany’s blue-chip DAX index just after 0915 GMT, with shares in the company dropping more than three percent.