Siemens Energy profits dip

Siemens Energy sector posted a big fall in profits as the German group announced the creation of nine new divisions for its operations – including one for Wind Power and Renewables.

The new Wind Power and Renewables division – along with those for Power and Gas and Energy Management – will be overseen  by  Lisa Davis, who joins Siemens from Shell, where she is currently executive vice president strategy , portfolio and alternative energies. She will be based in the US.

Siemens Energy chief executive Michael Suess is resigning from the Siemens managing board “for personal reasons” and “by mutual consent”, the company confirmed.

Profits in Siemens‘ Energy sector plunged in the company’s second quarter ending March 31, pushed lower by charges related to power transmission projects in Canada and charges related to defective wind turbines.

Second quarter profit for the overall Energy sector fell 54% to €255m ($355m), dragged down by €310m in project charges related to two high voltage direct current (HVDC) transmission projects in Canada that pushed the loss in the Power Transmission division to €297m from a loss of €49m in the year-earlier quarter.

Charges related to offshore wind grid connections in Germany contributed another €23m to the losses in Power Transmission, although here at least losses were less pronounced than a year earlier, when Siemens had to pay €84m for delayed German offshore links.

Revenue in the division was down 19% year-on-year to €1.23bn due to “selective order intake in the solutions business in prior quarters.”

Declines were heightened further by charges of €48m for replacing defective main bearings in onshore wind turbines that pushed the Wind Power division to a €50m loss in the quarter, compared to a €53m profit a year earlier.

Revenue in Wind Power, however, rose 11% to €1.17bn as surges in the Americas and Asia more than offset a decline in Europe.

Order intake in wind was down 49% due to a substantially lower volume from large orders compared to the second quarter a year earlier. Orders in Power Transmission rose slightly by 2% on order growth in Europe.

A 7% rise in profit in the company’s Power Generation business to €592m wasn’t able to compensate for the losses in the other two Energy divisions.

The bleak performance in the Energy sector was made up for far better profits in the conglomerate’s other sectors – Healthcare, Industry and Infrastructure – pushing up overall sector profit by 16% to €1.57bn. Net income rose 12% to €1.2bn.

Siemens chief executive Joe Kaeser commented on the mixed performance: “The second quarter showed that we still have a lot to do to improve our operating performance. Nevertheless we  are on course to reach our targets for the fiscal year.”

Kaeser later this morning will present more details on the company’s long-awaited new structure and is expected to comment on plans to formulate a take-over bid for the energy business at French rival Alstom.