Wind turbine repairs at Siemens Gamesa amplify Siemens Energy’s multibillion loss

Siemens Gamesa subtracted EUR 2.2 billion from parent company Siemens Energy’s results – the German engineering giant reported a EUR 2.9 billion net loss for the quarter through June. The bottom line was mainly hit by quality issues in the onshore wind segment and the rise in costs in the offshore division alongside the headwinds affecting its ramp-up, the company revealed.

In another negative surprise for its shareholders after a warning that it issued in June, Siemens Energy said it expects a further rise in costs in its offshore wind turbines and services business. It sees expenses from turbine repairs at EUR 1.6 billion over the next two years.

Net loss in the three months until June 30 came in at EUR 2.9 billion, with the company expecting to finish the fiscal year through September with a painful EUR 4.5 billion in the red. Charges at wind power subsidiary Siemens Gamesa totaled EUR 2.2 billion in the reporting period.

Siemens Gamesa dominates surge in orders nevertheless

Siemens Energy attributed the losses and projected expenses to “quality issues” of some of its onshore platforms and increased product costs and ramp-up challenges in the offshore business. The quarterly report showed that earlier contractual commitments are keeping the latter below water, because the company is facing a rise in procurement bills.

Conversely, it said the conventional energy segment had “excellent performance.” Moreover, the company’s widely tracked orders measure surged 54.2% year over year to EUR 14.9 billion. And the Munich-based engineering behemoth actually attributed it mostly to Siemens Gamesa and the grid technologies business.

New models were hitting market too fast, CEO complains

Chief Executive Officer Christian Bruch suggested that new wind turbine models were being rolled out “too fast.” In any case, huge losses including the ones yet expected are set to hamper investments and innovation.

But for now, Siemens Gamesa is expanding the capacity of its offshore production facilities and introducing larger turbines, including in France, Germany, Denmark and the United Kingdom. The continuing tight procurement market and the strained labor market are contributing to the said burdens, it pointed out.

Some market analysts say a capital increase would be the safest way to keep the business afloat.