In the financial report released on June 22nd, Siemens Energy withdrew its performance guidance for the 2023 fiscal year, and the company's stock price plummeted by over 37% on the 23rd. Siemens Energy warned that the quality problem of Siemens Gamesa wind turbine could cause losses of more than 1 billion euros and take several years to recover.

The main reason why Siemens Energy withdrew its performance guidance was that the wear rate of fan components produced by its subsidiary, Siemens Gamesa, which focuses on the design and manufacturing of wind turbine complete machines, was faster than expected. The problem involves key components such as wind turbine bearings and blades. The average lifespan of wind turbines can reach 20 years, but the wear and tear of newly installed and old units exceeded previous expectations.

On Thursday night, Siemens Energy announced that the review of Siemens Gamesa, a subsidiary, found that "the failure rate of wind turbine components has increased significantly".

Approximately 15% -30% of 130GW wind turbines installed worldwide will be affected, resulting in high maintenance costs. The management of Siemens Energy believes that the cost may reach up to 1 billion euros - which actually accounts for more than one-third of the company's reserved profits for maintaining these units, and this issue may persist for several years.

The company mentioned that quality issues "exceeded expectations and are directly related to selected components and a few important suppliers". In addition, issues such as rising shipping prices, supply chain disruptions, and an unsuccessful upgrade of production capacity on the 5. X onshore platform during the pandemic, as well as higher than expected costs, have all had an impact on performance.

Siemens Gamesa has conducted a technical review of the installed onshore units and product design, and listed the problems found so far in the announcement issued on Thursday. At the same time, the company also reviewed component suppliers and their ability to be responsible for quality.

Siemens Gamesa is currently evaluating the measures to solve these problems and calculating the related costs, and said that after a comprehensive analysis of the situation, it will be able to more accurately estimate the losses caused by these problems when the third quarter results are released on August 7.

It is understood that as early as January this year, Siemens Gamesa found the problem of defective parts of the unit. For this reason, the company has already spent nearly 500 million euros in expenses, but the problem behind it has proven to be even more serious. The CEO of Siemens Gamesa said on the conference call on Friday that although blades and bearings are part of the cause of the quality problem of the unit, it is impossible to eliminate the existing design problems. At the conference call, the CEO of Siemens Gamesa Energy also said that Siemens Gomesa "covered up too many things" and the quality problem was "more serious than he thought". However, the CEO of Siemens Energy insisted that it was not a wrong decision for Siemens Energy to completely take the equity of Siemens Gamesa this year.