May 4, 2016 / 5:41 AM / 4 years ago

UPDATE 2-Siemens beats forecasts, gets boost from Iran

* Easing of Iran sanctions boosts Power and Gas

* Wind Power and Renewables swings to profit

* Guidance confirmed although short-cycle may not pick up in H2 (Adds CEO comments, shares, analyst comment)

By Georgina Prodhan

FRANKFURT, May 4 (Reuters) - German industrial group Siemens easily beat expectations for second-quarter profits but said a recovery in businesses such as factory automation may be slower than expected.

Group industrial profit jumped 28 percent, boosted by a one-off impact from the easing of sanctions on Iran and a return to profit at Siemens’ wind power unit as projects were completed and initial costs fell.

Orders were lifted by a huge power deal in Egypt and an offshore wind farm contract in Britain, rising 7 percent overall, the trains-to-turbines group said on Wednesday.

Siemens shares rose 2 percent to 91.78 euros in early trading, outperforming the German blue-chip index, which rose 0.1 percent.

“Execution was solid across the board in both short and long cycle,” wrote Barclays capital goods analysts, who rate Siemens “equal weight/neutral”.

Chief Executive Joe Kaeser was cautious on recovery in the short-cycle businesses, including automation projects and primarily housed in the Digital Factory division. Germany was classified as slow and industrial demand in China still sluggish.

“We assume the bottom has been reached in our short-cycle businesses. However, over the next few quarters we expect slower recovery rather than material growth,” he said.

Siemens said on Tuesday it was replacing the CEO of the Digital Factory division - Anton Huber, who will retire in October - with 51-year-old Jan Mrosik, currently CEO of the Energy Management Division.

Siemens accelerated a cost-cutting programme and lifted its savings target for the year to 850 to 950 million euros ($978 to $1.1 billion) from 800 to 900 million euros previously.

The Munich-based group confirmed it expects moderate revenue growth for its fiscal year to end-September, a full-year industrial profit margin of 10-11 percent and earnings per share of 6.00 to 6.40 euros.

Arch-rival General Electric last month confirmed its target of 2 to 4 percent revenue growth for 2016 - a forecast that met with some scepticism due to sluggish demand for oil and gas equipment and a weak industrial economy.

Second-quarter industrial profit rose to 2.12 billion euros ($2.43 billion), beating all the estimates in a Reuters poll and lifting Siemens’ key industrial profit margin to 10.9 percent from 9.0 percent a year ago.

New orders rose 7 percent, while sales rose by a slightly-better-than-forecast 5 percent. ($1 = 0.8694 euros) (Reporting by Georgina Prodhan; Editing by Victoria Bryan and Keith Weir)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below