Siemens Energy, which owns approximately 67 percent stake in Siemens Gamesa Renewable Energy, has withdrawn its FY23 profit guidance for its subsidiary and itself.
This warning comes after a substantial increase in failure rates of wind turbine components, which prompted the board of Siemens Gamesa Renewable Energy - which is a major player in the wind turbine sector - to initiate a technical review of its installed fleet and product designs.
Siemens Energy's review indicates that achieving the desired product quality for certain onshore platforms will involve much higher costs than expected.
“Based on our initial assessment as of today, the potential magnitude of the impact leads us to withdraw the profit assumptions for Siemens Gamesa and consequently the profit guidance for Siemens Energy Group for fiscal year 2023,” Siemens Energy said in a press release.
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The company added that the potential quality-related measures and the associated costs are likely to be in excess of 1 billion Euro.
Further, “In addition, we continue to experience ramp up challenges in Offshore,” Siemens Energy cautioned.
Siemens Energy was born from the spinoff of the former gas and power division of German conglomerate Siemens. Siemens Energy, a part of Germany’s DAX index, tumbled around 33 percent on June 23.
Siemens India had sold its wind energy business to its parent in 2015, market participants pointed out.
Siemens Gas and Power Holding B V held 24 percent stake in Siemens (India) Ltd as of March quarter 2023.
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Siemens Gamesa Renewable Energy highlighted the risks for onshore wind turbines, which might probably not be a challenge that Indian players would face, an analyst from a foreign brokerage firm said.
Yet, what has made market participants slightly nervous, is the company highlighting that the cost for onshore wind turbine could be a massive figure. This reflects negatively on onshore wind turbine manufacturers such as Suzlon Energy and Inox Wind, he added.
On the contrary, an analyst from another global brokerage firm said this news could be a positive for both Suzlon Energy and Inox Wind with these companies getting more orders and customers, and probably gaining market share as well.
Suzlon Energy shares have rallied close to 50 percent in a month and about 80 percent in three months. Whereas Inox Wind is up 35 percent and over 50 percent in the same time frame. Shares of the former ended two percent higher on June 23 while the latter's stock ended flat.
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