In the third quarter of fiscal-year 2014 (Q3'14), German conglomerate Siemens posted strong results in most areas: Net income rose to EUR 1.4 billion, and total profit from the company's various sectors rose to EUR 1.7 billion. However, Siemens' energy business experienced some financial challenges tied mainly to offshore wind.
Siemens' wind sector profit was EUR 38 million in the quarter, an increase from EUR 21 million in Q3'13. Notably, though, last year's third-quarter results were low due to EUR 91 million in charges related to inspecting and retrofitting B53 rotor blades.
Furthermore, Siemens says its wind division's revenue mix for Q3'14 was less favorable due to a lower share from the higher-margin offshore business, and production costs were higher than average. Third-quarter order intake, however, was sharply above the prior-year level due to a EUR 1.6 billion order for an offshore wind farm in the Netherlands, the company adds.
Profit in Siemens' overall energy sector dropped 6% year-over-year to EUR 405 million. The company says the quarter was affected by ongoing profitability challenges within its energy sector. Most notably, its power transmission business experienced project charges such as EUR 128 million in impacts related to grid connections to offshore wind farms and EUR 27 million related to a high-voltage direct-current transmission project in the U.K.
‘While we made good progress in most areas, the energy sector poses a continued challenge in the quarters to come," says Siemens President and CEO Joe Kaese, adding that the company will continue to focus on its "Vision 2020" plan to help further growth.