Turbine faults cost Siemens EUR 223m

GERMANY: Costs related to faulty wind turbines have hit Siemens' results, forcing the wind division into a loss for both the fourth quarter and 2014.

The German manufacturer said it was impacted by EUR 223 million in charges for inspecting and replacing main bearings in onshore turbines, as well as repairing blades on both onshore and offshore turbines.

Head of the Siemens energy business Lisa Davis said: "The charge is related to inspecting and replacing bearings due to the early degredation in certain turbine models. We believe this is related to recent batches of bearings and we are in discussions with the supplier."

She said that the blade degredation was due to "harsh weather conditions both onshore and offshore". She added that Siemens has "implemented a design change for leading edge protection" for new blades and will be implementing a "similar retrofit" for existing blades.

These faults resulted in a loss for the wind division of EUR 66 million in the quarter to the end of September. This compares with a profit of EUR 179 million a year before. Revenue remained steady at EUR 1.62 billion.

For the year, the division made a loss of EUR 15 billion, compared to a profit of EUR 306 billion despite a 6% increase in revenue to EUR 5.5 billion.

Siemens has previously had issues with faulty blades and bearings. Blade breakages on a number of onshore turbines last year caused the curtailment of 700 turbines worldwide. And in 2010, the company was forced to carry out maintenance work on four offshore wind farms after it was discovered the bearings in the 3.6MW turbines' were corroding.

In addition to the write down due to turbine faults in the latest quarter, the wind division's performance was adversely affected by a lower profit contribution from the higher margin offshore business. The division's margin slumped from 11.1% to negative 4% in the latest quarter.

However, a strong performance from wind power in the Americas helping to lift overall revenues for the energy business.

There was also 19% growth in wind division orders in the fourth quarter to EUR 1.8 billion, boosted by several major offshore wind orders in the UK and Germany.