Siemens Energy scraps profit outlook this year on extensive turbine component failure rate.

A technical review of the installed onshore turbine fleet and product design has shown substantial increase in failure rates, the company says in a statement on Thursday evening.

”The current status of the technical review suggests that in order to reach the targeted product qualify of certain onshore platforms, significantly higher costs will be incurred than previously assumed,” writes Siemens Energy, adding:

”Potential quality related measures and the associated costs are currently under evaluation and are likely to be in excess of EUR 1bn.”

In addition to failure rate issues, Siemens Gamesa has launched a review of its current business plan as productivity improvements are not happening to the extent the company had expected. The company is also experiencing problems with ramping up wind turbine production.

”It is too early to have an exact estimate of the potential financial impact of the quality topics and to gauge the impact of the review of our assumptions on our business plans,” writes Siemens Energy.

The company maintains revenue guidance. Outlook was subject to upward adjustments in May to comparable sales growth of 10-12%, up from 3-7%. On that occasion, Siemens Energy curbed special items profit margins to the lower end of the original 1-3% guidance.