MUNICH (dpa-AFX) - Power engineering group Siemens Energy is expecting an annual loss of several billion euros due to massive problems in its wind business. Both costs for remedying quality defects in land turbines and significantly higher expenses for the ramp-up for marine (offshore) turbines weighed down. The restructuring program already underway at wind subsidiary Siemens Gamesa is now to be reviewed. Siemens Energy plans to present details at a capital markets day in November.

The defects affect certain rotor blades and main bearings of both older and new onshore turbines. Only some of the turbines are affected. When presenting its quarterly figures on Monday, Siemens Energy put the cost of the repairs at €1.6 billion, which was booked in the third quarter. In the offshore sector, the company expects higher product costs. This, along with "further problems" in ramping up activities, will lead to further charges of 600 million euros.

The bottom line is that the loss in the third quarter (to the end of June) multiplied to 2.9 billion euros, compared with a loss of 564 million euros in the prior-year quarter. Earnings were additionally impacted by a 700 million euro write-down on deferred taxes.

For fiscal 2022/23 (ending September), Siemens Energy now expects an after-tax loss of around €4.5 billion, compared with a loss of €712 million in the previous year. The operating profit margin is expected to be minus 8 to minus 10 percent. That's significantly less than the company had projected before withdrawing its forecast in June.

The company also became more cautious with regard to sales. Here, the company is assuming a comparable increase in earnings of nine to eleven percent, compared to the ten to 12 percent previously forecast. This figure excludes currency and portfolio effects.

At the end of June, due to the problems in the wind business, the management around Group CEO Christian Bruch had withdrawn the earnings forecast, which had already been lowered twice before and already provided for losses of hundreds of millions of euros. As a result, the share price plummeted by 37 percent within one day. Bruch had to admit that he had not expected the extent of the problems.

By contrast, the rest of the power engineering business proved robust. Operating earnings increased in the gas turbine and energy network businesses as well as in the Transformation of Industry business. Group sales increased by eight percent to 7.5 billion euros. Order intake increased by more than half to 14.9 billion euros.

"Our third quarter results show the challenges in the turnaround of Siemens Gamesa," Bruch commented on the figures. "The strong performance of the remaining businesses gives me confidence in our company's ability to put businesses back on a successful commercial footing."/nas/zb