The German energy company Siemens Energy AG (DE:ENR) announced its Q3 earnings for 2023 and gave a weak outlook for the full year. The company expects costs of €2.2 billion due to significant ramp-up difficulties in its wind business. The incurred charges will cause Siemens Energy’s net loss to increase by over six times in 2023, reaching €4.5 billion.
Post-results, the shares went down by 2.35% at the time of writing. Overall, the shares have lost 30% of their value in the last three months, mainly due to news of troubles in its wind business. Earlier in June, the company announced the continuation of problems in its wind turbine segment, Siemens Gamesa, and projected a cost exceeding €1 billion.
Siemens Energy is a global energy company involved in the design and operation of wind turbines, gas turbines, gas engines, steam turbines, and other power distribution systems.
Higher Costs, Wider Losses
In its earnings report for Q3 2023, the company reported a loss of €2.05 billion, as compared to a loss of €222 million in Q3 2022. The net loss for the period was €2.9 billion, much higher than the loss of €564 million posted in the same period a year ago.
On the brighter side, the company posted strong numbers in its conventional energy segment, driven by strong orders and more large orders. The company posted a growth rate of 54.2% in its orders of €14.9 billion. Additionally, revenues increased by 8% to €7.5 billion.
Moving forward, the company has revised its sales projection downward and provided a revised, more conservative profit forecast. Furthermore, the company revealed challenges such as defective components in its turbines and difficulties in scaling up offshore production, which have contributed to the reduced figures.
The company is committed to an action plan to handle the crisis, and investors and analysts now await further details to be provided during the capital markets day scheduled for November 2023.
Is Siemens Energy Stock a Buy?
The stock has received mixed opinions from analysts today. J.P. Morgan analyst Akash Gupta remains bullish on the long-term prospects and recommends a Buy on the stock. His price target of €23.0 implies an upside potential of 45%.
Conversely, Nick Green from Bernstein holds a different view and has confirmed his Sell rating on the stock. However, his price target still predicts a growth rate of 26% in the share price.
On TipRanks, ENR stock has a Moderate Buy rating backed by a total of 13 recommendations, of which seven are Buy. At an average price forecast of €22.35, analysts are predicting a growth of over 45% in the share price.
