Siemens warns of tough year after sharp quarterly profit decline

FILE PHOTO: The logo of German industrial group Siemens is seen in Zurich, Switzerland, January 30, 2019. REUTERS/Arnd Wiegmann/File Photo

MUNICH: Siemens AG warned a market slump is set to continue after quarterly profit missed estimates due to a steep decline in the automotive, machine-building and energy businesses.

Adjusted earnings before interest, taxes and amortization from the company’s industrial business dropped 30% to 1.43 billion euros ($1.58 billion), the company said in a statement Wednesday. This compared with the average company-compiled analyst estimate of 1.88 billion euros.

Siemens forecast a "moderate decline” in software and factory automation this fiscal year, a weakness it had already pegged in the previous quarter. Europe’s largest engineering firm is exposed to the broader auto industry decline, which could worsen due to the coronavirus epidemic raging in China, where factories are closed and supply chains disrupted.

Siemens’s earnings come on the same day as an annual shareholders’ meeting, where Chief Executive Officer Joe Kaeser is expected to face more pressure from environmental activists to pull out of a contract to supply equipment to an Australian coal mine. The controversy has led to noisy protests and Greenpeace unfurling a banner on its headquarters Tuesday.

Siemens announced Tuesday it’s raising its holding in wind turbine maker Siemens Gamesa Renewable Energy SA through the purchase of Iberdrola SA’s 8% stake for 1.1 billion euros, as it prepares to overhaul its energy business and list the power and gas division in September.

Once the energy spinoff is complete, Siemens will be focused on making rail and power-distribution equipment and industrial automation software. It could also be Kaeser’s last big move as CEO. The company has said a decision about his successor and timing of his replacement will be made later this year.

Revenue fell 1% to 20.32 billion euros on a comparable basis vs. Bloomberg-compiled estimate of 20.72 billion euros.Orders fell 4% on a comparable basis. The company confirmed full-year guidance.