Siemens Energy loses $8 billion after wind turbine failures

The sell-off of Siemens Energy shares deepens, causing a loss of market value of up to $8 billion, alarms Reuters. Siemens Energy share prices have fallen to record highs after growing problems at Siemens Gamesa Renewable Energy. Share prices fell as much as 36% after the company reported a “significant increase in wind turbine component failure rates,” Energy Voice’s Ryan Duff determined.

Siemens Energy said it was abandoning its annual profit forecast and warned shareholders that additional costs could exceed €1 billion. The company experienced difficulties when, after Russia’s aggression in Ukraine, the prices of steel and other key raw materials necessary for the production of turbines rose. However, then the situation was not so alarming, when in this year. wind turbine failures.

“While this should be clear to everyone, I would like to reiterate how bitter this is for all of us,” Christian Bruch, chief executive of Siemens Energy, told reporters. Following these reported issues, “the board has initiated an extended technical review of the installed Siemens Gamesa turbines,” the companies said.

Siemens Energy (ENR1n.DE) shares fell for the second straight session to €14.35 a share on June 26. This was caused by a wave of target price cuts and downgrades following deeper than expected problems in the wind turbine manufacturing division that emerged in mid-June 2023.

– After the warning [of the forecast hold – MG], while stocks are now more than a third cheaper, investors’ confidence in the change in the situation has been seriously damaged, not only because of the difficult to quantify risk associated with arranging earlier deliveries, but also because of the lack of predictability of actions (Siemens Gamesa)” – Citi analysts justified their decision.

They announced that depending on whether the reliability issues [of wind turbines – MG] can be brought under control, a price per share at any time between 11 and 34 euros is possible, adding that it is crucial what Siemens Energy says during the presentation third-quarter economic results on August 7.

On July 2, Siemens Energy shares rose to €16.18, so not much. The situation is serious in the light of statements by the CEO of Siemens Energy, quoted by The Economist, noting that “Siemens’ wind turbine business is heading off course.” Christian Bruch [President, CEO, Chief Sustainability Officer, Siemens Energy – MG] has always said that Siemens Energy’s turnaround will not be easy, but “this setback is more serious than I thought possible.”

In a phone call with analysts on June 23, after the company ditched its profit forecast for this year, the head of Siemens Energy (Siemens’ gas and energy business spun off in 2020) said “too much has been swept under the carpet.” – quotes The Economist. He admitted that Siemens Gamesa, a manufacturer of wind turbines, will suffer heavy losses this year and will take longer than expected to reach profitability.