Siemens shares nosedive on overhaul plan, energy woes
FRANKFURT AM MAIN: Shares in Siemens plummeted after falling demand for gas turbines weighed on quarterly earnings, and the German conglomerate announced a major revamp of its industrial units.
Net profit at the sprawling group plunged 14 per cent to 1.2 billion euros (US$1.4 billion) in the third quarter of its financial year, compared with the same period a year earlier.
Revenue at Siemens – which also builds trains, industrial robots and medical scanners – fell four per cent to 20.5 billion euros, slightly below analysts’ expectations.
Siemens blamed “a sharp decrease in profit” at its ailing power and gas unit, as well as overall “negative currency effects” and higher taxes.
Quarterly income was driven by the group’s digital services, led by a spike in profits at its factory automation arm.
The group also highlighted a 16-per cent increase in overall orders, boosted by demand for big-ticket items like trains and wind turbines, while orders in its Healthineers medical devices business were flat.
“Our global team delivered a strong quarter, highlighted by outstanding order intake,” chief executive Joe Kaeser said in a statement.
“We diligently address our opportunities and challenges going forward,” he added.
Investors were unimpressed however, sending Siemens shares down 4.7 per cent to 114.2 euros and to the bottom of the bluechip DAX index, itself down 1.9 per cent by 1050 GMT on global trade tensions.
Siemens also gave details of a major restructuring it plans to begin in October, trimming its industrial units from five to three to make them more independent and better able to respond quickly to market demands.
The overhaul has been spurred by troubles in Siemens’ power and gas unit, which has long been grappling with “structurally” lower demand as energy trends shift towards renewables.
Some 7,000 jobs are set to be slashed at the division.
As part of its new ‘Vision 2020+’ revamp, announced in a statement late Wednesday, Siemens said it would strengthen its digital offerings, focussing on the internet of things, industrial automation and electric mobility.
Speaking during a conference call, CEO Kaeser said now was “the best time” to embark on the overhaul.
The plan will see the group divided into three operating companies – gas and power, smart infrastructure, and digital industries.
They will operate alongside the group’s existing Healthineers division, the wind-turbine unit Siemens Gamesa and the planned Siemens Alstom company, following a merger of its rail activities with the French maker of TGV trains. — AFP