Siemens Energy shares plunged on Friday, after the company revealed that Siemens Gamesa had found that up to 30 percent of its fleet of wind turbines could be defective due to faulty components.
Siemens Energy announced late Thursday that it had conducted a review and found “a substantial increase in the failure rates of wind-turbine components”.
The company stated that it could take many years to repair the defective components and “significantly more costs” than originally estimated. The company reported that new estimates projected $1.09 billion for repairs. However, the final financial impact has yet to be determined.
In light of these findings, the company has decided to withdraw its profit forecast for the year.
Siemens Energy said that it was too early to estimate the financial impact and the effect of reviewing our assumptions.
“However based on our preliminary assessment as of today the potential magnitude of impact leads us, to withdraw the profit assumption for Siemens Gamesa, and therefore the profit guidance of Siemens Energy Group for the fiscal year 2023,” the statement added.
Jochen Eickholt, the CEO of Siemens Gamesa, stated during a Friday analyst conference call that the company estimates between 15-30% on its onshore turbine fleet are affected by component failures.
The Wall Street Journal reported the defective parts included bearings and blades. The Wall Street Journal also reported that turbines can operate for 20 years, but Siemens Energy found wear on both new and older installations.
Christian Bruch, President and CEO at Siemens Energy, explained in the conference call that “the fact that we’ve identified more quality issues marks a significant step back for us.” These problems are more serious than we previously knew, and are linked directly to a small number of important suppliers.
Bruch said that “at this time, we think the costs will likely be more than 1 billion euros.” Bruch claimed that the company had “swept too much under the rug”.
Siemens Energy shares fell over 37% after the announcement on Friday, amid an uncertain profit forecast and questionable repair costs.