|
 Despite slowing growth in China and weak oil prices that have
depressed capital spending, Munich-based Siemens reported a 10
percent jump in industrial profit and its first quarter of organic
revenue growth in a year.
"We cannot make our customers buy more but we can do more
productivity in our company and innovate more," Chief Executive Joe
Kaeser told CNBC TV ahead of the annual shareholder meeting,
claiming success for a self-help regime of cuts and divestments.
The results, which were also boosted by the weak euro, were markedly
more upbeat than those of U.S. and Dutch rivals General Electric and
Philips.
Siemens now expects earnings per share of 6.00 euros to 6.40 euros
($6.50 to $6.94) for its financial year through end-September, up
from its previous forecast of 5.90 to 6.20 euros.
By 1105 GMT (6:05 a.m. ET), Siemens shares were up 7 percent to
89.27 euros, their highest level since China-led turmoil took hold
of global stock markets at the beginning of the year.
"The robust industrial performance in the quarter has set Siemens up
to be one of the best performers this results season. We expect the
stock to outperform peers slightly," UBS analyst Fredric Stahl said,
who rates Siemens "buy".
Siemens' performance was driven by its healthcare, transportation
and energy-management divisions.
The Digital Factory division, with whose help Siemens hopes to
narrow a still yawning profitability gap with GE, lost almost 2
percentage points from its profit margin due to slowing demand from
China. The business supports manufacturers with a range of
technologies.
Transportation and energy management won a series of large orders
while Siemens' healthcare division -- like that of Philips --
rebounded in China from a low base a year ago.
SOFTWARE EXPANSION
Kaeser said Power and Gas margins would likely hit a low this year,
arguing that demand for oil would continue to drive demand for
Siemens' services even if depressed prices stymied capital
expenditure in the sector.
[to top of second column] |
Siemens widened its exposure to the oil and gas markets with the
ill-timed $7.8 billion acquisition of U.S. oil equipment maker
Dresser-Rand last year.
Investors seem prepared to look beyond the oil risk to see that
Siemens is still relatively lowly valued - at 12.6 times 12 month
forward earnings, below GE's multiple of 18.8 and Philips' 14.0,
according to Thomson Reuters data.
Siemens' 10.4 percent industrial profit margin last quarter was an
improvement but still far below GE's 18.3 percent.
To boost margins and build on its traditional strengths, Siemens is
adding a software layer to its electrification and automation
operations.
It announced on Monday night it was buying U.S. industrial software
firm CD-adapco for $970 million, the latest in a string of
acquisitions in the area.
Kaeser said Siemens had seen a strong pickup in demand from China
for such factory software last quarter, amid a general environment
of weak spending on capital equipment that lopped 2 percentage
points of its Digital Factory unit profit margin.
(Reporting by Georgina Prodhan; Editing by Maria Sheahan and Keith
Weir)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
