2023-06-23 15:18:41
The German energy company Siemens Energy revealed on Friday, June 23, that the scale of wind turbine failures at its subsidiary Siemens Gamesa was much greater and more costly than expected. At 9:30 a.m., Siemens Energy shares dropped 32.7% on the Frankfurt Stock Exchange, bringing the market capitalization down by around 6 billion euros.
This fall in Frankfurt is unprecedented since the scandalous bankruptcy of the payment provider Wirecard in June 2020.
Wind turbine component failures
The brutal reaction of the market follows the publication of a press release on Thursday evening in which the Munich group reported a “significantly increased failure rate” wind turbine components.
At the heart of the problems encountered were faulty components, mainly related to the bearings and rotor blades of turbines on land installations, said Jochen Eickholt.
The parent company of Siemens Gamesa plans more than one billion euros in costs for the rehabilitation of facilities. Such a cost that earnings forecasts for 2023 are outdated.
The in-depth internal technical review of the wind farms showed results “much worse than I thought possible”said Jochen Eickholt, boss of Siemens Gamesa during a conference call with a particularly dark tone.
Problem branch
Society has certainly known only“a handful of failures” on a fleet of several thousand turbines, he added. But you have to assess “what to expect in the next 20 years” and already consider preventive measures.
This is not the subsidiary’s first difficulty: it is also struggling to increase the production capacity of its offshore wind farms. “It is clearly disappointing, while the 2024 financial year promised to see the margin improve”comments Philip Buller, an analyst at Berenberg.
The difficulties of Siemens Gamesa, in competition with the Danish Vestas, have weighed on the German group for a long time, which prompted Siemens Energy to take full control of the company last year after having been a shareholder for several years.
The Munich group wanted to simplify its financial communication and draw better synergies between the group’s divisions. However, these expectations did not “achieved as we had planned”said Jochen Eickholt, partly because of rising material costs.
Loss 2023 dug
Siemens Gamesa’s earnings forecasts for 2023 have lapsed and, consequently, those of Siemens Energy as well. In May, Siemens Energy expected to generate a negative net result this year worse than the previous year, already negative 712 million euros.
The Munich-based group will be able to provide a new estimate of its expected loss and additional costs when it reports its results for the third quarter of the staggered fiscal year on August 7. The Siemens conglomerate, which still owns about 33% of Siemens Energy, sold nearly 3% at 9:30 GMT.
Siemens took Siemens Energy public in September 2020 and the stock’s erratic run has impacted its earnings ever since.
#Siemens #Energy #falls #swept #debacle #wind #energy