Siemens says profits up on global upturn

Siemens, which runs its business year from October to September, said in a statement net profit jumped by 12 percent to 2.2 billion euros ($2.7 billion) in the three months to December.

Underlying or operating profit was also up 12 percent at 2.2 billion euros while first-quarter sales grew by three percent to 19.8 billion euros.

But chief executive Joe Kaeser warned there was much to do to future-proof the industrial behemoth.

“Traditional conglomerates don’t have a future. We have to lay the foundations now for the next-generation Siemens,” he said.

Kaeser’s ambitious plans to restructure the sprawling group include planned factory closures in the struggling gas turbine business and a stock market flotation for the valuable medical devices division.

The medical devices unit saw orders, revenue and profits fall back slightly in the first quarter, due to “significant currency headwinds”, but Siemens said the unit remained on track for its initial public offering.

In the power and gas division, profits fell by almost half and orders and revenue declined as demand for its power plant turbines fell away.

Siemens announced a massive restructuring in November, cutting nearly 7,000 job cuts worldwide in the traditional power plant building business.

“We are convinced there will be a global market for gas turbines, and that is why we are still investing,” Kaeser said.

“But the market will be smaller and won’t be in Europe, rather in China, the US and in the Middle East.”

Other units of the Munich-based giant were in much healthier shape and “taking advantage of the global economic upturn,” he added.

Orders at Siemens’ wind energy unit surged after a merger with Spanish firm Gamesa was finalised, even if profits shrank slightly over the quarter.

In the factory automation division, orders and revenue jumped, especially in China, although the effects of a recent acquisition sapped profits.

The train construction division, which recently announced a tie-up with French rival Alstom, reported a surge in orders, revenue and profits after it secured new contracts in Europe, Israel and the United States and its latest high-speed trains entered service in Germany.

Looking ahead to the full year, Siemens was more cautious, saying that continuing headwinds in the energy market and “geopolitical uncertainties” painted a more “mixed picture”.

It said it was pencilling in “modest growth in revenue” and earnings per share around the same level as in the 2016/2017 business year.

Siemens shares added 0.8 percent to trade at 122.18 euros just after midday in Frankfurt Wednesday, slightly outperforming the DAX index of German blue-chip shares which added 0.28 percent.