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(Sharecast News) - Siemens Energy withdrew its profit forecast on Friday, after warning it may need to spend more than €1bn to fix technical problems at its wind turbine business.
The German firm said a technical review of a "substantial" increase in failure rates of wind turbine components had exposed more significant problems than initially thought, and it now expected to incur "significantly" higher costs - likely in excess of €1bn - as a result.
Problems with rotor blades and bearings are understood to be the main issues.
In addition, Siemens acknowledged that onshore productivity improvements were not materialising to the extent previously expected, and that it was continuing to experience ramp up challenges in its offshore business.
As a result, it has withdrawn profit assumptions for the wind turbine unit, Siemens Gamesa, and profit guidance for Siemens Energy for the 2023 fiscal year.
The announcement sent shares in the firm, one of the world's largest wind turbine manufacturers, sharply lower. By 1330 the stock had lost 34%.
Berenberg said: "This is clearly disappointing, given that the 2024 full-year had looked set to be the first materially improved margin year, as headwinds posed by Gamesa were meant to be moving into the rear-view mirror.
"The scale of the latest difficulties was not expected, and is likely to reignite criticism of the rationale, timing and the price paid for the acquisition of the Gamesa minorities, when due diligence was clearly insufficient. This also raises questions about culture."
In May, Siemens Energy - which was spun out of conglomerate Siemens - said the outlook for Siemens Gamesa was "volatile" but that it still expected a stronger performance in the second half.