Siemens profit dips as orders soar

GERMANY: Profits more than halved at Siemens' wind turbine business during the first three months of 2013, yet at the same time, key European offshore deals helped the firm record a major boost in orders.

Siemens... orders on the up
Siemens... orders on the up

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Wind revenue for January to March — the second quarter of Siemens' current financial year — was EUR 1,046 million, down 19% from the same period last year. This was largely due to a decline in the US market.

Profits, meanwhile, were EUR 53 million, 59% lower than the profits of EUR 130 million recorded in Q2 2012.

Siemens blamed the fall on the US market, where Q2 was an exceptionally busy period last year as developers sought to get projects built before the US production tax credit (PTC) was expected to expire at the end of the year.

New projects were then halted or postponed at the end of 2012 as developers waited to see whether the PTC would be, as it eventually was, extended.

This led to a corresponding drop in deliveries for Q2 this year. Despite these falls, there was good news for the engineering giant's wind division in terms of new turbine orders, which were up by more than 200%. Orders in Q2 2012 were valued at just  EUR 568 million, but for Q2 2013 stood at EUR 3.29 billion.

The firm credited the boost to offshore turbine deals done in Europe during the first three months of the year.

Siemens president and CEO Peter Loescher said the key deals were in Germany and the UK.

"Siemens Wind Power was able to book two major orders in Europe," said Loescher in a presentation to analysts today.

"First, an order from Dong Energy. We will install 166 wind turbines of the 6MW class at the Hornsea wind farm off England’s North Sea coast — that's the first major order for these new turbines. And a second major order in Germany’s North Sea. We received an order from the WDP Group in Bremen to deliver and install 80 wind turbines. The contract is worth over EUR 700 million. The order also includes a ten-year service contract. That is the longest-term service contract for offshore wind power Siemens has ever received."

On the orders front, more good news is yet to come: the bumper second quarter figures don't include the deal to supply 934MW of turbines to Dong Energy's Gode Wind offshore project in Germany, announced in April.

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