Siemens Profit Boosted by Asset Sales

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The FINANCIAL — German engineering giant Siemens AG reported a surge in net profit in the three months to end March, driven largely by gains it booked from the sale of its stake in a household-appliances joint venture with Robert Bosch GmbH and the disposal of its hearing-aid unit and hospital-information business, according to Nasdaq.

Net profit for the period, Siemens’s fiscal second quarter, rose to EUR3.89 billion ($4.41 billion) from EUR1.12 billion during the same period last year, beating analysts’ expectations. Analysts had forecast a net profit of EUR2.01 billion, according to a recent poll by The Wall Street Journal.

Revenue rose by 8% to EUR18.05 billion from EUR16.7 billion last year, helped by the euro’s weakness against major currencies. New orders climbed by 16% to EUR20.75 billion, boosted by large domestic contracts at Siemens’ train business.

However, low oil prices and volatile economic conditions in some parts of the world squeezed the group’s profitability. The overall industrial profit margin dropped to 9% from 10.3% during the same period last year, with the power and gas division posting a profit margin of 12.9%, down from 20.3% last year.

The Germany group’s Chief Executive Joe Kaeser has faced pressure from investors to justify Siemens’s planned $7.6 billion acquisition of U.S. oil-equipment maker Dresser Rand Group Inc., announced last September, which some have judged expensive as oil prices have tumbled.

The company also announced an additional 4,500 job cuts world-wide 2,200 of which are expected to be in Germany in the power and gas unit and at some of the group’s underperforming businesses. Siemens is also cutting roughly 7,400 other jobs globally.

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Siemens reiterated its guidance for the 2015 fiscal year, saying its expects to attain a profit margin for its industrial businesses between 10% and 11%.

 

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