Siemens on track for 2020 despite slow start

by AFP/ pic by BLOOMBERG

GERMANY – German industrial conglomerate Siemens reported Wednesday a tentative start to its 2019-20 financial year with falling profits but said it was on track to spin off its energy businesses in September.

Net earnings at the Munich-based group, whose products range from trains to factory equipment and wind turbines, fell three percent year-on-year in its October-December first quarter, to just under 1.1 billion euros ($1.2 billion).

Weighing on the result were a slump into the red at wind power division Siemens Gamesa, driven by delays to major projects, as well as severance costs related to the first among more than 8,000 job cuts planned across the group over coming years.

“The first quarter started slowly as expected,” chief executive Joe Kaeser said in a statement.

Siemens has suffered both from the general global economic slowdown driven by trade conflicts in recent years, as well as a longer-term downward trend in demand for some of its big-ticket items such as turbines for gas power plants.

Operating profits slipped sharply at both its factory automation unit, down 32 percent, and the gas and power division, down 63 percent.

Meanwhile despite the operating loss at Gamesa, the wind turbine arm boosted revenues 82 percent, taking in 4.6 billion euros to account for over one-fifth of the group’s 20.3 billion euros total in the quarter.

The energy unit is slated to be bundled with the gas and power division into a new business called Siemens Energy, set to be spun off later this year.

The company “will list Siemens Energy on the stock exchange in September as planned,” CEO Kaeser said.

Looking ahead to the full year, Siemens forecast “moderate growth in comparable revenue” and earnings per share of between 6.30 and 7.00 euros, compared with 6.41 euros in its previous financial year.

The group will hold its annual general meeting for shareholders later Wednesday.

Environmentalists are expected to greet it with a wave of protests after the company stirred climate outrage by sticking to a contract to supply rail signalling equipment to a massive Australian coal mining project.