Siemens Energy, a prominent player in the global energy sector, has unveiled its financial performance for the third quarter of fiscal year 2023, marked by a series of developments and challenges at Siemens Gamesa.
Siemens Energy’s revenue experienced a notable uptick, increasing by 8.0 percent to reach €7.5 billion. However, this positive momentum was accompanied by a net loss of €2,931 million, significantly impacted by adverse tax effects linked to charges incurred at Siemens Gamesa. This contrasts with a net loss of €564 million reported in Q3 FY 2022.
The financial results shed light on the challenges faced by Siemens Energy’s subsidiary, Siemens Gamesa. Notably, quality issues affecting certain Onshore platforms, coupled with increased product costs and challenges in the Offshore business, have impacted Siemens Energy’s overall financial performance during the third quarter.
Despite these challenges, Siemens Energy has reported strong growth in orders, recording €14.9 billion in orders, reflecting a substantial growth rate of 54.2 percent. This growth has been primarily driven by significant orders in Siemens Gamesa and Grid Technologies (GT), leading to a book-to-bill ratio of 1.98. The surge in orders has subsequently elevated the order backlog to a new record of €109.0 billion.
Siemens Energy’s focus on continuous operational performance is evident in the sharp increase in profit before special items for Gas Services (GS), GT, and Transformation of Industry (TI), in contrast to the prior-year quarter.
Addressing the challenges at Siemens Gamesa, Siemens Energy has undertaken a comprehensive status report analyzing the quality problems associated with specific onshore wind turbine platforms, 4.X and 5.X. While these issues pertain mainly to certain rotor blades and main bearings, it’s important to note that not all turbines on these platforms are affected. To address these concerns, a specialized task force composed of experts from Siemens Gamesa, Siemens Energy, and external consultants AlixPartners has been established.
The financial outlook includes an assessment of the expected costs for rectifying these quality issues. Siemens Gamesa has allocated charges amounting to €1.6 billion for future expenses, with the majority of these anticipated costs projected for fiscal years 2024 and 2025. Additionally, Siemens Gamesa faces increased product costs in the offshore sector, leading to extra charges of €600 million in Q3.
Amidst these challenges, Siemens Energy has adjusted its fiscal year 2023 expectations. The company now anticipates comparable revenue growth in the range of 9 percent to 11 percent, accompanied by a profit margin before special items between negative 10 percent and negative 8 percent. The net loss projection for the Siemens Energy Group is expected to be around €4.5 billion.
In response to the challenges at Siemens Gamesa, Siemens Energy has taken proactive steps, including establishing a special committee for a detailed investigation, engaging external experts, and forming cross-functional task forces to address the issues. Siemens Energy also plans to reevaluate its wind business strategy, with further details expected to be revealed during the upcoming Capital Markets Day in November.