April 17, 2012 / 7:21 AM / 5 years ago

UPDATE 2-Siemens to scrap profit goal on wind power hit-report

* Siemens faces more charges at Power Transmission unit - paper

* Q2 charges to be roughly at Q1 level of 203 mln euros - paper

* Siemens declines to comment

* Shares down 0.4 pct vs German blue-chips up 1.3 pct (Adds further details, updates shares)

By Maria Sheahan and Jens Hack

FRANKFURT, April 17 (Reuters) - German engineering conglomerate Siemens is poised to scrap its full-year net profit target due to losses related to offshore wind projects, Financial Times Deutschland reported, citing company sources.

The newspaper said on Tuesday Siemens would book charges at its Power Transmission business for the financial second quarter at about the same level as in the first quarter, when they stood at 203 million euros ($265 million).

Udo Niehage, who heads the unit, is set to take on new duties at the company, a Siemens source told Reuters. Siemens declined to comment.

“The problems at the Power Transmission division are well known since the first quarter. However, the magnitude seems to be worse than previously expected,” DZ Bank analyst Karsten Oblinger said.

Siemens, which sees itself at the forefront of Germany’s push for greener energy, has struggled to make a profit from connecting offshore wind farms to mainland power grids.

The company, Germany’s largest by market capitalisation, blamed an unexpectedly sharp fall in first-quarter core profit partly on complex regulations that delayed offshore wind projects.

A spokesman for Siemens, which is due to publish results for its second quarter ended March on April 25, declined to comment on the newspaper report on Tuesday.

Shares in Siemens eased by 0.4 percent to 71.47 euros by 1130 GMT, underperforming the German blue-chip index, which was 1.3 percent higher.

Analysts had already doubted whether Siemens would reach its target of unchanged net profit from continuing operations of 6 billion euros, excluding one-offs, for the full year ending in September.

Finance chief Joe Kaeser earlier this month acknowledged that most analysts’ estimates were between 5.2 billion euros and 5.4 billion euros, but said Siemens’s guidance remained valid unless it issued a new one.

The Power Transmission unit, which supplies high-voltage cable systems and grid access, posted first-quarter revenue of 1.47 billion euros - or about 8 percent of group revenue - and a loss of 145 million euros.


In January, Siemens blamed delays in connecting offshore wind farms in Germany - which it builds for grid operator Tennet - to the grid, as the main factor for the 203 million euro charge it took.

Offshore wind farms were originally seen as a main driver in German efforts to meet ambitious renewable energy targets.

However, the German government, which plans to install about 7,600 megawatts (MW) of offshore capacity by 2020 has said it may ask development bank KfW to help shoulder costs and speed up the process.

Several companies, including top German utilities E.ON and RWE, have warned that delays in the connection of wind parks to the grid could lead to the collapse of the country’s offshore plans.

Wind power accounts for 7.6 percent of renewables in Germany’s energy mix, the biggest share. However, only a fraction of it is offshore. ($1 = 0.7656 euros) (Additional reporting by Till Weber and Christoph Steitz; Editing by David Holmes and Erica Billingham)

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