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Siemens Energy tumbled nearly 40 percent Friday after an earnings warning. The company on Thursday night scrapped its profit expectations for this year because of problems with its wind turbines.

Things are going badly for the wind power sector, especially in Europe. Top figures at the largest companies in the sector have been sounding the alarm and calling for help for months. Between near-total dependence on China and stifling inflation, they keep repeating that they don't have enough resources to keep up with the pace of demand, which due to European climate targets, is spiraling out of control.

In related news, is not looking at the (near) future through rose-colored glasses.

  • The company slashed earnings expectations for this year because "wind turbine problems are worse than expected." Management acknowledged that repairs would be very expensive.

The details: That admission was made by Jochen Eickholt, the CEO of Siemens Gamesa, the group's subsidiary specializing .

  • "It is a bitter and serious setback," admitted Eickholt, who explained that the extent of the breakdowns at the group's wind turbines was greater than expected. The top executive expects the repairs to cost more than 1 billion euros.
    • According to the CEO, the problems are due in part to design errors.
    • The problems relate to onshore installations, but Siemens Gamesa is also experiencing difficulties in increasing production capacity in its offshore farms.
  • Christian Bruch, CEO of Siemens Energy, did not mince words. "Too many things have been swept under the rug," he lamented, adding that the quality problems were "more serious" than he had thought possible.
  • Because of those problems, Siemens Energy does not expect to make a profit this year.

Share price plunges

Reaction:Investors pressed the sell button en masse.

  • Siemens Energy ended the trading day 37.3 percent lower yesterday.
  • The German group lost more than 6 billion euros in stock market value in a few hours.
  • That is the biggest share price drop in Frankfurt since the bankruptcy of financial services provider Wirecard three years ago.

And now? Chances are slim that the tide will turn quickly for Siemens Energy.

  • Most analysts think the problems at Siemens Energy will not be resolved soon.
  • "The problems will lead to higher repair costs in the coming years. That will probably also have an impact on cash flow in the coming years," Jefferies analysts said.
    • These predictions were confirmed by Maria Ferraro, CFO of Siemens Energy, herself: the impact of these problems will be felt over the next five years, she admitted.
  • Citigroup's experts placed more emphasis on Siemens Gamesa's underperformance in the offshore sector. This would be a particularly worrying sign, since this is a sector in which the group has generally performed well.

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