Siemens' writedown pushes company into first loss since 2010

Published Thu, Aug 11, 2022 · 02:16 PM

SIEMENS reported better-than-expected revenues for its third quarter on Thursday (Aug 11) as a writedown at Siemens Energy pushed the engineering and technology group into the red for the first time in nearly 12 years.

The maker of industrial software and trains reported revenues rising 11 per cent to 17.87 billion euros (S$25.2 billion) - beating analyst forecasts for 17.47 billion euros in a company-gathered consensus.

But Siemens posted a shareholders' net loss of 1.66 billion euros after taking a 2.8 billion euro non-cash charge for writing down the value of its stake in Siemens Energy.

The loss, Siemens first quarterly loss since the fourth quarter of 2010, meant Siemens had to 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.

Siemens owns a 35 per cent stake in the turbine and wind power company, which has had a troubled 2 years since spinning off in 2020, with operating problems and losses at its wind turbine division Siemens Gamesa.

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.

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"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 per cent since the beginning of fiscal 2022."

As well as the Siemens Energy charge, the company's figures were also hit by 442 million euro in costs related to its decision to quit Russia following the conflict in Ukraine.

During the 3 months to the end of June, Siemens said its orders rose to 22.07 billion euros, beating forecasts for 19.82 billion euros. The 7 per cent increase followed a 32 per cent increase in orders in the previous quarter.

Profit at its industrial business rose 27 per cent to 2.88 billion - short of forecasts for 3.02 billion euros.

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 said last week, looking back at the results of other companies in the sector such as ABB and Schneider Electric.

Siemens said it has continued to avoid major disruptions caused by supply chain problems, especially around getting enough components, raw materials and logistics. REUTERS

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