Siemens Energy has seen its third-quarter results dragged down by losses at its renewable energy unit Siemens Gamesa.
Siemens Gamesa saw its loss before special items for full fiscal-year 2023 hit €4.3bn, wider than a €617m loss in 2022, with its 2023 profit margin reaching -47.8%.
This drove Siemens Energy’s loss before special items down to negative €2.7bn, with a profit margin before special items of -8.9%, in line with its adjusted guided range of -10% to -8%. In total, the company suffered a net loss of around €4.6bn.
Siemens Energy’s order backlog reached €112bn, while orders exceeded the prior-year level and rose by 33.8% on a comparable basis to €50.4bn.
Revenue increased by 9.9% on a comparable basis to €31.1bn, with all segments apart from Siemens Gamesa contributing to this growth.
Free cash flow pre-tax decreased to €784m from an exceptionally high level in the previous year, and was significantly better than expected.
As a result, net financial debt at the end of the year was €200m, also much lower than expected.
Siemens warned that Siemens Gamesa suffered an unexpected, serious setback this year as charges for quality issues in the onshore business, increased product costs and ramp-up challenges in the offshore business severely impacted the results for the fiscal year 2023 and will continue to impact the group’s profitability in the near to mid-term.
Break-even at Siemens Gamesa is now expected in fiscal year 2026.
The company said that quality problems at Siemens Gamesa had been ringfenced and the company had begun turnaround measures.
It has almost completed the technical analysis of the quality issues affecting the onshore platforms 4.X and 5.X with the results so far confirming what was communicated in August 2023. Remedial actions have been defined and mitigation and corrective actions are under development.
In addition, Siemens Gamesa has still suspended the commercial activities on the 5.X platform and is defining a timeline and approach to set out how and when to resume sales with a design incorporating the respective corrective measures.
In the offshore sector, Siemens Gamesa is focusing on ramping up its factories and new product generation as well as executing its order backlog. Output has been significantly increased compared to the fiscal year 2022.
To help achieve the turnaround, and return Siemens Gamesa to profitability, the scope of Siemens Gamesa’s activities is currently reviewed. More details will be revealed on Capital Market Day on November 21.
Christian Bruch, President and CEO of Siemens Energy, said: “In a year of unprecedented challenges, Siemens Energy showed that turnarounds are achievable, with the businesses, excluding wind, meeting or exceeding their full-year targets.
“We are also seeing progress in dealing with the issues at Siemens Gamesa, and I am encouraged that the data from the installed onshore turbines confirm our previous findings. Our strong balance sheet remains a top priority, and Siemens Energy’s vital role in the energy transition will continue to drive our growth and success in the years ahead.”
Siemens Energy overall expects comparable revenue growth (excluding currency translation and portfolio effects) in fiscal year 2024 in a range of 3-7% (actual figure FY 2023: 7.3%) and a profit margin before special items of negative 2% to positive 1%.
Furthermore, the group expects a net income of up to €1bn including impacts from disposals and the acceleration of the portfolio transformation.
Free cash flow before taxes is expected to be around a negative €1bn.