Siemens Energy saw $6.3 billion wiped off its market capitalization on Friday after warning that the impact of quality problems at its Siemens Gamesa wind turbine business would be felt for years.
The group scrapped its 2023 profit outlook late on Thursday after a review of its wind turbine division exposed deeper-than-expected problems that could cost more than 1 billion euros.
“This is a disappointing and severe setback,” Siemens Gamesa CEO Jochen Eickholt told journalists on a call.
“I have said several times that there is actually nothing visible at Siemens Gamesa that I have not seen elsewhere. But I have to tell you that I would not say that again today.”
Siemens Energy’s share price plunge on Friday was the biggest since the group, which supplies equipment and services to the power sector, was spun off from Siemens and separately listed in 2020.
Shares were down 31.5%, with traders and analysts pointing out that the extent of the company’s latest problems was still uncertain.
“Even though it should be clear to everyone, I would like to emphasise again how bitter this is for all of us,” Siemens Energy CEO Christian Bruch told journalists in a call.
Finance chief Maria Ferraro earlier told analysts that the majority of the hit would be over the next five years.
“Given the history and nature of the wind industry, the profit warning was not a complete surprise, but what surprised us was the magnitude,” analysts at JPMorgan said.
Issues at Siemens Gamesa have been a drag on the parent for a long time, prompting Siemens Energy to take full control of the business after only partially owning it for several years.
The discovery of faulty components at Siemens Gamesa in January had already caused a charge of nearly half a billion euros.
Eickholt said that while rotor blades and bearings were partly to blame for the turbine problems, it could not be ruled out that design issues also played a role.
Bruch also blamed the corporate culture at Siemens Gamesa, the result of a merger of the wind turbine division of Siemens and Spain’s Gamesa, saying: “Too much has been swept under the carpet”.
He said that the setback from the quality problems was “more severe than I thought possible”. At the same time, he said he did not believe that the full takeover of Siemens Gamesa had been a mistake.
(Reuters: Editing by Kirsten Donovan, Jason Neely, Jane Merriman and Jan Harvey)