By Geoffrey Smith
Investing.com -- Shares in Siemens Energy (ETR:ENR1n) fell on Tuesday after the German-based company said it expects no improvement this year in its bottom line, after a horror first quarter marked by write-offs at its wind turbine unit Gamesa .
Siemens Gamesa Renewable Energy (BME:SGREN) booked charges of over €500 million (€1 = $1.0720) in the first quarter of the year ending September 2023, due to quality issues at wind turbines installed in the past, which have forced it to factor in higher warranty and service maintenance costs in the future.
As a result, the company's net loss more than doubled to €598M from €246M a year earlier.
The company said it now expects the full-year loss to be on a par with last year's 56 cents a share, having earlier said it would narrow sharply. The profit margin before special items is now seen at between 1% and 3%, the guidance range being shifted down by 1% at both ends.
SGRE's problems have been a constant source of concern for the group since it was spun off from its parent, the German engineering giant Siemens, in 2020. In the first quarter, they again overshadowed a strong performance by the company's other units, which make equipment for electricity transmission grids as well as steam turbines for conventional power stations. At the Gas Service division, revenue rose 22% and profit rose by over 50%, while at Grid Technologies, operating profit more than doubled to €98M on a 19% rise in revenue.
Grid Technologies and Gas Service both generated better cash flow than expected during the quarter and the company now expects free cash flow to be positive for the full year, having earlier predicted outflows of over €100M.
By 04:50 ET (09:50 GMT), Siemens Energy stock was down 4%, the worst performing stock in the benchmark DAX index, which was up 0.1%. The stock had doubled from its October lows but is still more than 20% down from its 2020 IPO price, having suffered badly from the rout in German industrial stocks last year after Russia's invasion of Ukraine.
The war in Ukraine has deprived Siemens Energy of one of its biggest clients, Russian gas monopoly Gazprom (MCX:GAZP). It had been a major contractor for the Nord Stream 1 and 2 pipelines, projects which now look likely to deliver no further revenue for the company.