SIEGY - Siemens Energy raises full-year loss estimate to Euro4.5B on wind turbine troubles

2023-08-07 07:57:45 ET

Siemens Energy ( OTCPK:SMEGF ) ( OTCPK:SIEGY ) said Monday it expects to report a €4.5B loss this year thanks to problems with its wind turbine business, up from previous expectations that it would exceed the previous year's €712M loss by up to ~€1B, and warned that fixing the issues will prove costlier than expected.

Mounting challenges at the wind turbine business will lead to costs of €2.2B (~$2.42B), the company said, mainly due to quality issues of the 4.X and 5.X onshore platforms, with the main part of the expected repair costs for platforms expected in FY 2024 and FY 2025.

The company projects EBIT margin in a range of negative 10% and negative 8% vs. a previous range of plus 1%-3%, comparable revenue growth of 9%-11% compared with 10%-12% previously, and free cash flow up to a negative low triple-digit million amount vs. previous expectations of up to a low triple-digit million amount.

The gloomy forecast came as Siemens Energy ( OTCPK:SMEGF ) ( OTCPK:SIEGY ) reported a Q3 net loss of €2.9B compared with a €546M loss in the year-earlier quarter, but revenue edged up to €7.51B from €7.28B while orders jumped to €14.89B from €9.84B, helped by higher volume from large orders.

Q3 results "demonstrate the challenges in turning around Siemens Gamesa," Siemens Energy ( OTCPK:SMEGF ) ( OTCPK:SIEGY ) CEO Christian Bruch said, noting the company's other divisions, including gas turbines and power converter stations, performed well.

The company said it is reviewing its current strategy for the wind business and will release more information at its capital markets day in November.

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