Component Failure Rates Sink Siemens Gamesa Deeper into Red
Wind turbine manufacturer Siemens Gamesa has recorded EUR 760 million net loss in the first quarter of the financial year 2023, driven largely by charges due to a negative development of failure rates in specific components detected during the evaluation of the installed fleet.
This has led to charges of EUR 472 million at EBIT level, resulting in expected higher warranty and service maintenance costs than previously estimated, Siemens Gamesa said in a statement announcing the preliminary results for the quarter ended 31 December.
The total amount includes mainly a reduction of revenue, and an increase in warranty provision charges, impacting principally the Service business.
The order intake for the quarter stood at EUR 1.6 billion. The company’s order backlog was EUR 33.7 billion at the end of the quarter. The revenue was around EUR 2 billion, and the net debt was around EUR 1.9 billion.
Siemens Gamesa management no longer expects Siemens Gamesa’s profitability to be in line with its business plan for fiscal year 2023, due to the charges. Therefore, the management of Siemens Energy, the parent company of Siemens Gamesa, now expects Siemens Energy’s profit margin before special items in a range of 1 per cent to 3 per cent, as opposed to the previously projected range of between 2 per cent to 4 per cent.
The Siemens Energy management also expects a net loss on prior year’s reported level, compared to a sharp reduction expected before.
Siemens Gamesa ended the Financial Year 2022 with a net loss of EUR 940 million. The results were ascribed to market imbalances caused by persisting supply chain disruptions, heightened by geopolitical tensions and additional waves of COVID-19, as well as upward pressure on the price of inputs and shipping.
The company also experienced internal challenges during the period, including the industrialization of the Siemens Gamesa 5X onshore platform, where progress was slower than planned, and additional costs related to failures and repairs of components in legacy onshore platforms.
In its latest statement on the preliminary results for the first quarter of FY 2023, Siemens Gamesa said that progress has been made on the Siemens Gamesa 5X platform with manufacturing and installation levels ahead of plan in the first quarter. Additionally, the terms and conditions have been improved on the new order intake, the company said.