Fresh problems related to wind power generation weighed on the profits of engineering giant Siemens' today.
The German conglomerate booked €128 million ($171.6 million) of project charges for impacts mainly related to grid connections to offshore wind farms in the three months to the end of June, compared with €26 million in the same period a year ago.
That helped push profits at the company's energy division down 6% to €405 million.
This is not the first time that its operations relating to wind generation have caused Siemens problems. In the same quarter a year ago, the company booked charges of €91 million for inspecting and refitting onshore turbine blades, following reports that turbine blades had become detached in the US.
The fall in profits at the energy division was partly the reason that Siemens overall third quarter results came in below investors' expectations. Overall profits rose 37% to €1.74 billion, but this is understood to be below analysts' consensus forecasts.
CEO Joe Kaeser warned that the energy sector "poses a continued challenge in the quarters to come".
The energy sector saw an 8% decline in revenues, mainly as a result of currency conversions, in the quarter.
The power transmission business made a loss of €188 million – compared with a loss of €49 million the previous year – as a result of the offshore wind connection charges.
Revenues in the division were down 17% to €1.3 billion as it became more selective about taking on contracts amid the continuing challenges with offshore wind farms. However, it said it had won an offshore wind contract in Germany under more favourable terms.
Siemens' wind power business saw profits up 76% to €38 million, although this was flattered by comparisons with last year, which included the €91 million charge for retrofitting the turbines.
The wind sector's revenues were up 7% to €1.4 billion on the previous year, as an increase in the onshore business more than offset declines in offshore. But onshore wind is lower margin than offshore, which impacted profitability.
The wind sector saw orders treble during the quarter, boosted by a €1.6 billion order from the Gemini offshore farm near the Netherlands, which it will provide with 150 turbines.
Profit at the power generation arm, which makes products including gas and steam turbines, was up 7% to €538 million.
Its solar business, which makes products including inverters, control systems and turbines for solar thermal plants, moved into the black, with a profit of €5 million, compared with a loss of €47 million in the previous year.
Peter Cripps
