Christian Bruch, CEO of Siemens Energy, said that “a lot has been suppressed” regarding Siemens Gamesa.
Shares of Siemens Energy plunged 35% earlier today after the company downplayed its profit forecast and cited enduring wind turbine issues. Following a review of concerns at its subsidiary Siemens Gamesa, the company announced its findings of a “substantial increase in the failure rate of wind turbine components”. However, its shares declined due to market reaction to the unpleasant update.
Siemens energy wind turbine problem remains
Thursday’s report reveals that the Siemens Gamesa board has begun an “expanded technical review” to enhance product quality. meanwhile, Parent Company noted that review costs are now “significantly higher” than previously predicted. Current estimates are over 1 billion Euros, also $1.09 billion. As far as Siemens Energy is concerned, it is currently impossible to accurately estimate the forthcoming financial impacts of the quality issues considered. It is also too early to calculate the outcome of its perception review on its business plans. Speaking on wind turbine issues, Siemens Energy noted,
“However, based on our preliminary assessment today, the potential magnitude of the impact prompts us to withdraw profit assumptions for Siemens Gamesa and consequently profit guidance for Siemens Energy Group for fiscal year 2023.”
According to Reuters, Christian Bruch, CEO of Siemens Energy, said that “a lot had been swept under the carpet” with regard to Siemens Gamesa. The chief executive said that the quality issues in the company were more than he had imagined. As for the senior research analyst at Alliance Bernstein, although Siemens Energy may recover from its decline, the market is in complete shock from the recent developments. he explained:
“There is a service order book of 17 billion euros and it is providing service for many years to come on installed wind farms and wind turbines – five years ahead, sometimes 10 year contracts – and to find out whether your There’s a handful of components that aren’t working as you planned, you might have to go in and replace those components, that’s a huge responsibility that you’re taking on.
Additionally, Green questioned Siemens Energy’s estimation of component failures. The company said component failure could occur in between 15% and 30% of its installed turbine fleet. On the other hand, the research analyst said that “there is still a bit of a question mark about where this liability will end up”.
Fingers are crossed hoping for another update in August. Green said the company may have an accurate estimate by then. He added that Siemens Energy would have handled the issues at its subsidiary – Siemens Gamesa. He concluded that “it’s definitely a worryingly huge hit and has taken the market by surprise.”
Ibukun is a crypto/finance writer interested in delivering relevant information using non-complicated words to reach all types of audiences. Apart from writing, she enjoys watching movies, cooking and exploring restaurants in the city of Lagos where she lives.
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