The shares of Siemens Energy plummeted more than 30% this Friday on the stock market after this Friday it communicated to the market a reformulation of its profit forecasts affected by the impact of the problems in Gamesa’s turbines.
This reformulation implies parking the benefits that it expected to obtain at the end of 2023 and the reason is, as the company has explained, “a substantial increase in failures in the parts of the wind turbines manufactured by the Spanish company Gamesa, which Siemens has integrated into its shareholding
The German company has announced that it will review all of Gamesa’s production of onshore wind turbines to “achieve the desired product quality” and that the cost of the process will involve a minimum of 1,000 million euros.
Likewise, Siemens has acknowledged that it is reviewing the “critical” assumptions for the current business plan in view of the fact that productivity improvements “are not materializing” as expected. Likewise, Siemens warns that they “continue” to face difficulties in the ‘offshore’ mill sector.
Consequently, Siemens Energy has decided to annul its earnings estimates for the company and for Siemens Gamesa for the current year. However, revenue expectations for the gas division, network technologies and industrial transformation are maintained, according to information provided by Siemens this Friday.
“We have launched exhaustive investigations into these quality issues that go far beyond anything we have seen so far,” Siemens Energy CEO Christian Bruch told a news conference via telephone, noting that the review is being carried out by a new leadership team with a completely new vision of the whole situation. “We don’t have a final result today, but I can already announce that the result of the current review will be much worse even than I would have thought possible,” he predicted.
In this sense, he acknowledged that, although on previous occasions he had stressed that there is nothing at Siemens Gamesa that he has not also witnessed in other places, “now I would say that I would not repeat this today,” he said.
On the other hand, he affirmed that the acquisition of Siemens Gamesa cannot be described as an “error”, since that of renewables is “a very promising business”. “But we also believe that we need to address these issues in a more consistent and effective way,” he said.
What he did question was the governance structure that existed between Siemens Energy and Siemens Gamesa as an independent company, which, in his opinion, “was not effective enough.”
“Today is not the time to draw preliminary or premature conclusions, but we need to think about decisive cultural problems. I am not talking about different nations, but about the way in which problems are dealt with, the speed and agility with which these problems are dealt with, and the transparency”.
The merger between Gamesa and Siemens’ wind business was closed in 2017. Since then, problems have occurred for Siemens Gamesa, which has come to chain several ‘profit warnings’ in recent years.
In fact, at the end of the year Siemens Energy carried out a takeover bid for Gamesa, which became effective last February and concluded with the end of listing for the Spanish group after 22 years in the markets.
