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Siemens Energy on Monday reported a record net loss in the third quarter, after it was hit with costs amounting to 1.6 billion euros ($1.7 billion) to fix technical problems with onshore wind turbines.
The group warned in June that quality problems at its struggling Siemens Gamesa wind unit were worse than previously thought, sending the stock down more than 30 percent. After an initial estimate showed that repair costs would exceed one billion euros, Siemens Energy announced the allocation of 1.6 billion euros, to solve problems affecting “some fan blades and main bearings on some platforms.”
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The amounts allocated for repairs severely affected the company's overall performance in the third quarter of the fiscal year, which declined to a net loss of 2.9 billion euros.
The company had recorded a loss of 564 million euros in the same period a year ago.
The company's results also declined due to additional costs amounting to 600 million euros in the offshore wind energy sector, due to "high production costs" and difficulties in increasing production capacity.
Siemens Energy said its results were also affected by the write-off of deferred tax assets worth 700 million euros during the quarter.
Looking ahead, the group expects a larger net loss for the full year of around 4.5 billion euros, compared to losses recorded by the company over the past year of 712 million euros. After an initial estimate showed that repair costs would exceed one billion euros, Siemens Energy announced the allocation of 1.6 billion euros, to solve problems affecting “some fan blades and main bearings on some platforms.”
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The amounts allocated for repairs severely affected the company's overall performance in the third quarter of the fiscal year, which declined to a net loss of 2.9 billion euros.
The company had recorded a loss of 564 million euros in the same period a year ago.
The company's results also declined due to additional costs amounting to 600 million euros in the offshore wind energy sector, due to "high production costs" and difficulties in increasing production capacity.
Siemens Energy said its results were also affected by the write-off of deferred tax assets worth 700 million euros during the quarter.
Looking ahead, the group expects a larger net loss for the full year of around 4.5 billion euros, compared to losses recorded by the company over the past year of 712 million euros. CEO optimism
Siemens Energy established a “special committee to conduct a detailed investigation of quality and productivity problems at Siemens Gamesa.”
The company also plans to provide an update on its wind energy strategy to investors in November.
However, Christian Bruch, CEO of Siemens Energy, expressed optimism about the future.
The company saw a jump in orders during the third quarter, with orders at the Siemens Gamesa unit alone more than doubling year-on-year.
“We believe more than ever in the potential of wind energy,” Brosh told reporters.
Long-running problems at the Gamesa unit prompted Siemens Energy last year to take full control of it, but the hoped-for turnaround has yet to materialise.
The problems faced by the Gamesa unit come at a difficult time for the wind energy sector in general in Europe.