FRANKFURT/MUNICH (Reuters) - German engineering conglomerate Siemens AG (SIEGn.DE) slashed its full-year outlook on Wednesday after incurring another major charge related to delayed offshore wind power projects in the second quarter.
The announcement comes a day after Siemens named a new chief for the affected Power Transmission division, having ousted the unit’s former CEO Udo Niehage.
“We are addressing the problems (at Power Transmission) systematically,” group Chief Executive Peter Loescher said after Siemens reported a two-thirds drop in fiscal second-quarter net profit from continuing operations to 1.05 billion euros.
Germany’s biggest company by market capitalisation said it now sees net profit from continuing operations for the fiscal year through September at 5.2-5.4 billion euros ($6.9-7.1 billion), compared with a previous outlook for 6 billion euros.
Analysts had expected Siemens to cut its outlook, with consensus at about 5.2 billion euros, after delays with wind power projects led to an unexpectedly sharp fall in first-quarter core profit.
The German offshore market is expected to grow rapidly in the coming years as Berlin banks on wind farms to help it shift its energy mix toward renewables and away from nuclear power.
But Siemens, which sees itself at the forefront of Germany’s push for greener energy, has struggled to make headway in several projects to connect wind farms off the German North Sea coast with mainland power grids.
Siemens and Swiss rival ABB ABBN.VX dominate the market for offshore power links, but Siemens has said a complex regulatory approval process in Germany means it is taking longer to install the connections than expected.
Several companies, including top German utilities E.ON (EONGn.DE) and RWE (RWEG.DE), have warned that delays in the connection of wind parks to the grid could lead to the collapse Of the country’s offshore plans.
The Power Transmission business - which generated about 8 percent of quarterly group revenue - took a 278 million euro hit in the second quarter, after 203 million of charges in the first quarter, and had a loss of 169 million euros.
ABB also reported quarterly results on Wednesday, posting a 5 percent increase in first-quarter net profit to $685 million slightly missing the $692 million poll forecast.
Editing by Mark Potter