- Siemens Energy on track for first annual profit
Siemens Energy is on track to post its first annual profit since becoming an independent company. While the company reported a loss of €102 million for the third quarter, it reaffirmed its guidance for an annual profit of up to €1 billion by the end of the year. After the first nine months, the energy technology conglomerate is well-positioned to finish the year in the black for the first time.
The wind power business, Gamesa, continues to weigh on Energy's results. The company is grappling with past mistakes, including contracts that are no longer profitable due to increased costs, quality issues with two onshore wind turbine models, and high setup costs for offshore wind projects. However, these challenges are not unexpected, unlike in previous years when poor performance from the then-independent Spanish subsidiary, Siemens Gamesa, forced the parent company to issue profit warnings.
The rest of the company is performing solidly
Meanwhile, the rest of the company is performing solidly. While Gamesa reported a loss of €463 million, this is only a fifth of the amount from the same period last year. Additionally, order intake decreased by 91%. However, other segments are able to offset much of this. Notably, the power transmission segment saw significant increases in revenue and earnings, and Gas Services more than doubled its order intake, primarily due to large service contracts in the Middle East. As a result, the company's revenue grew significantly to €8.8 billion, and its order backlog increased to €120 billion.
"Growing power markets need a broad range of our products," said Energy CEO Christian Bruch. "Our businesses with power transmission and gas turbines are particularly benefiting from this. Importantly, we've also been able to improve our margin quality along with the increasing order backlog. Despite all the challenges, we look optimistically to the future and are on track to meet our annual guidance after the first nine months."
With a profit cushion for the final quarter
The company's guidance for an annual profit of up to €1 billion is largely thanks to a gain from the sale of its India business in the first quarter. In the typically weaker fourth quarter, Energy can afford a significant loss, as it has already posted a profit of almost €1.6 billion after nine months.
Electricity generation from the power transmission segment has significantly increased, contributing to the company's revenue growth. The company's robust performance in electricity-related sectors, along with the increase in gas turbine sales, is a testament to the growing demand for reliable electricity sources.
