Wall Street

Siemens Energy’s Wind Division Loses $5 Billion

Siemens Energy warns of weak profits and loses $5 billion in the value of its wind division

Shares of the wind turbine division Siemens Gamesa fell after the company reduced its financial outlook for the third time in 9 months, which led to a tumble in the market value of the project’s competitor and German parent company Siemens Energy.

Siemens Gamesa shares collapsed 16.2% to its lowest value since July 2020, while Siemens Energy shares tumbled 17.4%, registering the largest single-day loss ever, taking 4.6 billion euros ($5.2 billion) of its market value to zero.

Profit margins for wind turbine makers have been squeezed by rising costs of basic raw materials such as steel, forcing companies such as Siemens Gamesa and its Danish rival Vestas to raise their prices, noting that shares of Vitas and its small German rival Nordex are down 8%.

Siemens Gamesa warning has forced Siemens Energy to lower its financial outlook, increasing pressure on CEO Christian Brasch to buy a 33% stake he does not already hold in the wind business so the business can control problems, even though the company had lifted its guidance earlier. Read more [Siemens Raises Expectations As Industrial Demand Grows].

Siemens Gamesa said that its core profit margin this year may fall to -4% and in the best case it will be +1%, noting that previous expectations were positive profits ranging between 1-4%.

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