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Siemens' posts first quarterly loss in 12 years after writedowns hit Q3

Stock Markets Aug 11, 2022 06:17AM ET
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© Reuters. FILE PHOTO: The Siemens logo is shown on a new Siemens Charger locomotive as it comes into service as part of the Coaster Fleet in Oceanside, California, U.S., February 8, 2021. REUTERS/Mike Blake
 
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By John Revill

ZURICH (Reuters) -Siemens said on Thursday it continued to see strong industrial demand during its third quarter, as costs related to its Siemens Energy investment and decision to quit Russia pushed the engineering group into the red for the first time in nearly 12 years.

The maker of industrial software and trains reported higher revenue and orders for the three months to the end of June, a positive sign for the health of the broader industrial sector.

In factory automation, all regions reported orders 20% higher than a year earlier, Siemens said, while elevated component and logistics costs were being tackled by passing on the costs to customers.

Chief Executive Roland Busch said demand was still strong, despite an environment affected by sanctions on Russia, high inflation and ongoing effects from the pandemic.

"We captured significant opportunities in a market environment with ongoing high demand," he said in a statement. "Our strong top line momentum continued, with a comparable order growth of 20% since the beginning of fiscal 2022."

Siemens, whose products are used to equip factories, buildings and transport networks, is seen as a signifier for the broader industrial economy.

Demand in the European capital goods sector is holding up, Barclays (LON:BARC) said last week, looking back at the results of other companies in the sector such as ABB and Schneider Electric (EPA:SCHN)

End-markets, such as automotive, machine building and electronics, showed "continued underlying growth momentum with signs of a certain normalization", Siemens Chief Financial Officer Ralf Thomas told reporters.

"For the future, we expect a sequential normalization of demand for the fourth quarter and a gradual reduction of order backlog in fiscal 2023," Thomas said, adding it would be unrealistic to expect orders growth to remain above 30% over the longer term.

Orders rose 7% to 22.07 billion euros ($22.8 billion) in the third quarter, while profit at its industrial business rose 27% to 2.88 billion euros.

But it posted a shareholders' net loss of 1.66 billion euros after taking a 2.7 billion euro non-cash charge for writing down the value of its stake in Siemens Energy.

Net profit also took a hit of 558 million euros from Siemens' decision to quit Russia following the conflict in Ukraine. Its shares were indicated 1.2% lower in early trading as it also cut its full year earnings per share guidance to 5.33 to 5.73 euros per share, from 8.70 to 9.10 euros previously.

Although these losses were partly offset by 739 million euros from the sale of its Yunex Traffic, the charges pushed Siemens into a net loss of 1.66 billion euros.

($1 = 0.9689 euros)

Siemens' posts first quarterly loss in 12 years after writedowns hit Q3
 

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