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Materials, product launch woes batter Siemens Gamesa forecasts

Siemens Gamesa shares plunge 17% after profit warning
Siemens Gamesa shares plunge 17% after profit warning   -   Copyright  Thomson Reuters 2021
By Reuters

By Isla Binnie

MADRID – Shares in Siemens Gamesa tumbled as much as 17% on Thursday after the wind turbine maker warned of a possible loss due to sharp increases in raw materials prices and product ramp-up costs.

Parent Siemens Energy scrapped its own margin target on Wednesday to factor in the second profit warning from the turbine business in less than three months.

Siemens Energy shares were down 8.5% at 0805 GMT, while the turbine division recovered slightly to 13% lower at 0805 GMT.

Siemens Gamesa is the world’s biggest maker of the offshore wind turbines that are key to plans set by some of the world’s biggest economies to cut carbon emissions.

It has been trying to turn around a less profitable onshore division and has already lowered its profit ambitions once this year, citing materials costs and execution delays which have been exacerbated by the coronavirus pandemic.

The company is grappling with higher ramp-up costs for its 5.X onshore wind turbine platform, especially in Brazil, where it complained of supply chain shortfalls and logistical bottlenecks.

Chief Executive Andreas Nauen said he remains optimistic that the company could reach a profit margin of 8-10% but the timing could slip from 2023 to 2024.

“We would like to come back to you once we have gone further with our homework,” he told analysts on a conference call.

In recent months, the company has pushed harder to pass on the rising costs of materials such as steel to its customers, Nauen said.

“Of course, (customers) do not happily discuss that, it’s clear… it’s also clear that in light of the size of the increases it cannot stay with us,” he said.

Siemens Gamesa has now lost almost a third of its market value so far this year, extending losses that began in January with a sector-wide fall in renewable energy stocks from a dizzying peak built up after an initial pandemic slump in 2020.

Siemens Energy was spun off from Siemens AG and listed last year.

(This story was refiled to delete repeated word in the headline)