siemens energy Shares plunged more than 37% on Friday after the company withdrew its profit forecast and warned that costly problems in its wind turbine sector could persist for years.
The company was born out of a spin-off of the former gas and power sector of a German conglomerate. siemenssaid late Thursday that an investigation into the problem at its subsidiary Siemens Gamesa had found a “significant increase in the failure rate of wind turbine components.”
Siemens Gamesa’s board has launched an ‘extended technical review’ aimed at improving product quality, leaving the parent company to incur ‘substantially higher costs’ than previously envisioned, which currently stands at 10 said it was estimated to exceed €100 million ($1.09 billion).
“It is too early to accurately estimate the potential financial impact of high-quality themes or to gauge the impact of reassessment on business planning,” Siemens Energy said in a statement.
“However, based on our initial assessment as of today, given the magnitude of the potential impact, we are withdrawing our earnings assumptions for Siemens Gamesa, resulting in Siemens Energy Group’s earnings forecast for fiscal 2023. We will also withdraw our projections.”
Siemens Gamesa has been a thorn in the side for its parent company since it was acquired outright late last year.
Siemens Energy stock price
Siemens Energy CEO Christian Bruch said in a conference call on Friday that “too much was hidden” at Siemens Gamesa and quality issues were “more acute than before”. said. [he] We thought it was possible,” Reuters reported.
Nicholas Green, head of European capital goods at AllianceBernstein, said Siemens Energy could bounce back from the fall, but the scale of the problem was shocking the market.
“We have a €17bn service order book and have been servicing installed wind farms and wind turbines for a number of years, extending into five-year, even 10-year contracts. , a small number of components turned out to be defective, and if they do not work as planned, we may have to replace them. Told.
Siemens Energy estimates that between 15% and 30% of its fleet of installed turbines may have component failures, but Green says there is “some skepticism about where responsibility lies.” There are still question marks,” he said.
“If we’re lucky, when they come to report in early August, we’ll be able to put some brackets on the size of the costs here and the size of the obligations ahead, but certainly this is a surprisingly big blow. Yes, it took the market by surprise,” he said.