Siemens Gamesa suffers blow in Q1 2023 due to components failure

Siemens Gamesa Renewable Energy SA (BME:SGRE) took a EUR-472-million (USD 511.4m) charge to operating profit in the first quarter ended December after discovering faulty components at the installed wind turbine fleet, which caused its warranty and maintenance costs to swell.

The charge will lead to approximately a EUR-760-million loss of EBIT before purchase price allocation (PPA) and integration and restructuring (I&R) costs for the first three months and affect Siemens Gamesa’s typically strong services business, the wind turbine maker said in its preliminary earnings report on Thursday.

"These charges reflect the outcome of the evaluation of the installed fleet, during which the company detected a negative development of failure rates in specific components resulting in expected higher warranty and service maintenance costs than previously estimated," the explanation reads.

The company's parent Siemens Energy AG (ETR:ENR) said separately that, despite an otherwise successful period, its first-quarter profit loss would amount to EUR 384 million due to having to swallow charges at Siemens Gamesa.

Management at Siemens Gamesa no longer expects its company's profitability to be in line with the business plan for fiscal year 2023, Siemens Energy said in its bourse filing.

Other Siemens Gamesa’s figures show that revenues for the quarter are expected to arrive at around EUR 2.0 billion, with net debt reaching some EUR 1.9 billion.

The turbine company recorded an order intake of about EUR 1.6 billion with the order backlog coming at EUR 33.7 billion at the end of the quarter. The average selling price at onshore order intake level was about EUR 0.95 million per MW.

The full first-quarter results will be released on February 2.

Siemens Gamesa also said that its internal reorganisation programme Mistral “is making progress towards the stabilization of the business and return to profitability”. In addition, the work on the troubled Siemens Gamesa 5.X turbine platform is progressing “with manufacturing and installation levels ahead of plan in the first quarter”, Siemens Gamesa said.

(EUR 1.0 = USD 1.084)

Choose your newsletter by Renewables Now. Join for free!