Siemens' restructuring costs weigh on profits

Source: Xinhua| 2018-11-08 22:44:21|Editor: yan
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BERLIN, Nov. 8 (Xinhua) -- Siemens' ongoing restructuring efforts weighed on its profitability during the fourth quarter (Q4) of fiscal year 2018, the German industrial conglomerate reported Thursday.

During the final three months of the fiscal year, which ended in September for Siemens, net profits nearly halved (minus 46 percent) to 681 million euros, as 386 million euros of quarterly expenses were recorded in relation to reforms of the ailing power&gas division.

In Q4, revenue rose by 2 percent on a currency-adjusted basis to 22.6 billion euros (25.8 billion U.S. dollars). Earnings before interest and taxes from industrial business were up slightly as well at 2.1 billion euros.

Siemens announced earlier that it would eliminate 6,000 positions at the unit which witnessed an eight- percent decline in divisional revenue.

In spite of these restructuring costs, the Munich and Berlin-based company highlighted Thursday that six of its eight divisions were performing well and that it had still met full-year targets set for 2018. Currency-adjusted revenue and customer orders both increased by five percent to 83 billion euros and 91.3 billion euros respectively, while annual net profits held steady at 6.12 billion euros as predicted.

"This demonstrates the ability of our global team which has presented itself convincingly in growth markets as well as challenging environments and achieved another strong annual result," read a statement by Siemens chief executive officer (CEO) Joe Kaeser.

Some of the strongest growth in Q4 was recorded at Siemens Digital Factory unit where revenues grew by 9 percent to 3.4 billion euros and profits soared by 28 percent to 616 million euros. The renewable energy unit Siemens Gamesa bounced back from a loss of 92 million euros in Q4 2017 to post a 140 million euro profit alongside 12 percent revenue growth to 2.6 billion euros in total.

Aside from costs stemming from corporate restructuring programs, Siemens pointed to "substantial" currency headwinds as having partially offset gains made by individual divisions. Looking forward, the DAX-listed group expressed confidence that it would experience further "moderate growth" in currency-adjusted revenue in the 2018/2019 fiscal year.

"We expect a continuously favorable market environment with limited risks from geopolitical uncertainties, especially for our short-cycle businesses," said Kaeser, who also predicted that Europe's largest industrial conglomerate would make progress in granting its individual units "even more entrepreneurial freedom" as outlined recently in a new "Vision 2020+" corporate strategy.