Siemens confident even as big orders fall

siemens

AFP

German industrial conglomerate Siemens confirmed its full-year forecast Thursday, after a third quarter that saw revenues and profits increase even as large orders fell.

The group reported a 7.0-percent increase in net profit to almost 1.5 billion euros ($1.8 billion) in the third quarter of its financial year between April and June, beating analysts’ forecasts of around 1.3 billion euros.

Revenues at Siemens, whose products range from wind turbines to trains to medical equipment, grew by 8.0 percent to reach 21.4 billion euros.

But the group reported a 6.0-percent fall in overall orders, mainly driven by fewer large contracts for its power and gas and wind power units.

Nevertheless, “we’re headed for a record year,” chief executive Joe Kaeser told journalists in a telephone conference.

Siemens said Thursday that the Kaeser, who has restructured the Munich-based group after years of growth into extremely disparate areas, had had his contract extended until 2021 by the supervisory board.

It pointed to “global energy trends” sapping demand for its gas turbines and related products, and to “volatility” in orders for offshore wind turbines to explain the drop in orders.

But other business areas reported big increases in orders, especially the train-manufacturing mobility division and the digital factory unit, which makes high-tech equipment for production lines.

The group highlighted the train business’ 111-percent leap in new contracts compared with April-June last year, as rumours grow that it will merge the unit with Canadian competitor Bombardier’s rail division.

Meanwhile, Siemens also announced Thursday that the long-awaited stock market flotation of its Healthineers medical equipment unit — one of its most profitable — will come in mid-2018.

With its diagnostic and imaging machines, the division hopes to become a world leader in medical equipment by 2025.

Kaeser recognised that “not everything is perfect at Siemens,” acknowledging the company’s crisis over gas turbine deliveries to Crimea.

In late July, the company said it would stop some business with Russia after finding out that four turbines destined for a power plant in the south of the country instead ended up in Crimea — subject to European Union sanctions following its annexation by Russia in 2014.

“What happened is unacceptable, but we can’t look at a whole country with suspicion,” Kaeser said of the turbine scandal.

Looking ahead to the full year, Siemens confirmed its previous forecast for “modest growth” in revenue and earnings per share of between 7.20 and 7.70 euros, up from 6.74 euros in 2016.

Shares in Siemens were the worst performers on the DAX index of German blue-chip shares early Thursday, losing 3.0 percent to trade at 112.55 euros ($133.25) by 0840 GMT.

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