Siemens AG (SIE) Chief Executive Officer Peter Loescher lent his face to a company advertising campaign last month that promoted a greater focus on renewable energy. Investors are still waiting for evidence the foray will pay off.
Siemens may have to lower its full-year profit goal when it reports earnings next week. Analysts surveyed by Bloomberg predict net income of about 5.57 billion euros ($7.32 billion), compared with Siemens’s own target of 6 billion euros. The power-transmission unit may book a charge of 200 million euros for last quarter, Andreas Willi, an analyst at JPMorgan, said.
Loescher’s bid to wean Siemens off nuclear power and generate 40 billion euros in sales from environmental products has suffered setbacks as the German engineering company struggles to connect offshore wind parks to the electricity grid and prices tumble for turbines. An earnings revision would deal a blow to Loescher, who in five years built his reputation on stabilizing Siemens’s historically volatile earnings.
“The industry and Siemens need to become more efficient, cut costs, industrialize processes and try to manage capacity as tightly as they can,” said Martin Prozesky, an analyst at Sanford C. Bernstein in London, who has a “market perform” recommendation on the stock. “In wind, offshore is still the best place to be.”