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Siemens Energy expects to rack up a €4.5bn loss this year as the German group struggles to fix its ailing wind turbine business.
The Dax-listed group warned investors on Monday that resolving issues at the wind turbine division, which has been beset by technical problems as well as the inflationary pressures afflicting the rest of the industry, will prove costlier than expected.
The forecast came as Siemens Energy reported a net loss of €2.9bn for the third quarter and slashed its outlook for annual revenues. Executives had previously predicted that losses for 2023 would exceed last year’s €712mn loss by a “low triple-digit-million” amount.
Siemens Energy said the troubles at its turbine business Siemens Gamesa “demonstrate the challenges” of reviving a division whose woes had already wiped more than €6bn off the value of the company.
Its share price has plummeted since June, when it disclosed technical problems and rising costs associated with its flagship 5. X onshore wind turbine.
In June, the company said the issues would cost €1bn to fix, with chief executive Christian Bruch admitting that the faults were “more severe than I thought possible”.
Announcing Monday’s results, Bruch insisted that strong performance in other parts of the business gave him confidence in the company’s “ability to put businesses back on a strong footing”.
Analysts said the struggles of Siemens Gamesa were symptomatic of a broader challenge across the renewable energy sector, which was confronting rising costs and tough competition on pricing.
But investors have demanded more transparency about the root causes of the problems at Siemens, according to William Mackie, head of capital goods research at the brokerage Kepler Cheuvreux.
Speaking prior to Monday’s results, Mackie said he had rarely seen “such a large divergence between the scale of a warning” and the damage to a company’s market capitalisation, saying it reflected poor communication by Siemens Energy.