Siemens sees pos­si­ble up­side to full-year earn­ings


Siemen­sAGChief Ex­ec­u­tive Of­fi­cer Joe Kaeser said Europe’s big­gest en­gi­neer­ing com­pany may beat its earn­ings fore­cast for the fis­cal year end­ing this month while the longer-term out­look is clouded by po­lit­i­cal con­cerns.

“This year we’re go­ing to be fine with our guid­ance — maybe even some up­side to it in a well-work­ing en­vi­ron­ment,” Kaeser said in an in­ter­view in Buenos Aires, where he at­tended a govern­ment fo­rum.

“Next year is a new game,” the CEO said. “What I am most con­cerned about next year is the in­creas­ing geopo­lit­i­cal in­sta­bil­ity, which in a cap­i­tal goods en­vi­ron­ment is not ex­actly help­ful.”

Siemens has raised its fi­nan­cial tar­get twice this year, most re­cently say­ing last month that it ex­pects earn­ings per share of be­tween 6.50 eu­ros ($7.25) and 6.70 eu­ros. An­a­lysts are ex­pect­ing the top end of that range, ac­cord­ing to the av­er­age of es­ti­mates com­piled by Bloomberg.

Kaeser’s op­ti­mism since the start of 2016 was at first greeted with sur­prise be­cause of a slow­down in China and con­tin­ued lower en­ergy prices. His al­most two-and-a-hal­fyear ten­ure has been marked by large ac­qui­si­tions to boost the en­ergy di­vi­sion, which has pulled in big or­ders for power pro­jects.

The shares have gained 17 per­cent this year, com­pared with a 2.9 per­cent fall on the DAX In­dex.

The CEO said that he is “very sat­is­fied” with his team and that the Mu­nich-based com­pany has been out­per­form­ing com­peti­tors.

Siemens' guid­ance for the cur­rent fi­nan­cial year also in­cludes “mod­er­ate” rev­enue growth, net of cur­rency ef­fects, and or­ders ac­cel­er­at­ing with a book-to-bill ra­tio Joe Kaeser, “clearly” above 1. The com­pany re­ported higher-than-ex­pected third-quar­ter profit on Aug 4 with a jumpin large or­ders for power-gen­er­at­ing equip­ment. Siemens is sched­uled to re­port full-year earn­ings on Nov 10.

Among the geopo­lit­i­cal un­cer­tain­ties that could lead cus­tomers to hold back on in­vest­ment, Kaeser cited in­sta­bil­ity in theMid­dle East, the United King­dom’s de­ci­sion to exit the Euro­pean Union and the forth­com­ing elec­tions in the United States.

“I’m not so much con­cerned about our abil­ity to per­form and not so much con­cerned about our com­pet­i­tive strength,” he said. “But the geopo­lit­i­cal en­vi­ron­ment is not ex­actly en­cour­ag­ing our cus­tomers to go the next level. So that is a sticky point for 2017.”

The US elec­tion cam­paign “po­lar­izes so­ci­ety and of course the in­dus­try”, he said. “There are a lot of ques­tions on how much of what some can­di­dates are say­ing is ac­tu­ally com­ing.”

What I am most con­cerned about next year is the in­creas­ing geopo­lit­i­cal in­sta­bil­ity...” CEO of Siemens AG the rise in Siemens AG’s share prices so far this year

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