Shares in Siemens Energy, one of the world’s biggest wind turbine makers, plunged 30 percent on Friday after the company warned it may have to spend more than 1 billion euros to fix a series of technical faults.
As a result of mounting challenges in its wind turbine business, Siemens Energy cut its profit forecast for the year, worrying investors who were reassured by the company last month that the outlook for the unit would improve in the second half.
Chief executive Christian Bruch said that “although it should be clear to everyone, I would like to emphasize again how bittersweet this is for all of us.”
The scale of the problems at Siemens Gamesa, the group’s wind turbine business, is a blow to an industry that has been hit by rising costs and supply chain disruption over the past 18 months.
Analysts at JPMorgan said the warning came at a time when “expectations are building that the worst for the wind industry is behind us,” but added that technical issues were a problem for others.
In a statement late on Thursday, Frankfurt-listed Siemens Energy said it expected “significantly higher costs”, potentially over 1 billion euros, following a review of the “failure rate of wind turbine components”.
He also noted the challenges in increasing facility productivity and increasing offshore wind capacity.
Siemens Energy on May 15 said the outlook for Siemens Gamesa was “unstable” with a weak first half, but expected a stronger performance in the second half.
Speaking to reporters on Friday, Jochen Eickholt, chief executive of Siemens Gamesa, highlighted the problems with rotor blades and bearings and said the recovery could take longer than expected. The company noted problems with components in January.
“It’s a disappointing, bitter setback,” Eickholt said. “The quality issues go beyond what is known, especially in the land area.”
“Failure rates affect certain components just like (before), but they’re also different because they’re new forms of failure.”
He added: “We are dealing with the issue, but it takes a long time and comes at a cost.”
The estimated costs of more than €1 billion are spread over a “series of years”.
It comes less than two weeks after Siemens Energy took full control of Siemens Gamesa to try to turn the business around after a series of profit warnings.