Siemens Energy, which supplies equipment and services to the power sector, scrapped its 2023 profit outlook after a review of its wind turbine unit exposed deeper than expected problems that could cost more than 1 billion euros ($1.1 billion).
Issues at the company's Siemens Gamesa unit have been a drag on the parent, and the announcement marks the latest blow to Siemens Energy's efforts to get these under control following a full takeover of the business.
Frankfurt-listed Siemens Energy shares were down 12.8% at 1849 GMT after the announcement, which follows the initial discovery of faulty components at Siemens Gamesa in January that caused a charge of nearly half a billion euros.
Siemens Energy said that an extended technical review of Siemens Gamesa's installed turbine fleet and product designs was launched following that is says was a substantial increase in failure rates of components.
The company, which was spun off from Siemens (SIEGn.DE), said the review suggests that it will be significantly more expensive than initially thought to reach the desired product quality of certain onshore turbines.
This, it said, would incur costs of more than 1 billion euros.
"We are also reviewing assumptions critical to the existing business plans given productivity improvements are not materializing to the extent previously expected," Siemens Energy said.
"In addition, we continue to experience ramp up challenges in Offshore."
Problems at Siemens Gamesa had already caused Siemens Energy to tone down its profit outlook last month, expecting its profit margin before special items at the lower end of its 1%-3% target range for the fiscal 2023 year.
However, the company, which makes and services gas turbines and builds large power transmission stations, kept its sales outlook, which forecasts revenues to grow by 10%-12%.
($1 = 0.9132 euros)
