Siemens AG (SIE)’s underperforming rail technology and offshore wind projects will result in additional charges that will dent earnings in the second quarter, according to Chief Financial Officer Joe Kaeser.
Earnings at Europe’s biggest engineering company will also be affected by waning demand from industrial clients in the U.S. and Germany as well as a weaker-than-expected recovery in China, Kaeser was cited as saying by Rheinische Post in an interview. Company spokesman Guenter Gaugler confirmed the comments by phone. Siemens is to release quarterly earnings on May 2.
“From today’s point of view and despite the burdens in the first half, I continue to expect profit per share for the whole company in 2013 to reach at least the level of the prior year,” Kaeser was cited as saying. “It will be tighter on the operating side, however.”
Siemens Chief Executive Officer Peter Loescher is midway through a program aimed at cutting costs by 6 billion euros ($7.9 billion) by the end of 2014. Profitability at Munich-based Siemens dropped last year to the levels when Loescher started in 2007, prompting a new restructuring program in November after the CEO acknowledged he had been too slow to react to falling demand amid the global economic slowdown.
Kaeser said second-quarter order intake will “clearly exceed” that of the first quarter and the year-earlier period because of several large orders.
Siemens is divesting units that it deems may hinder its goal of a 12 percent profit margin by the next fiscal year. It’s spinning off its Osram lighting unit, while seeking buyers for businesses such as airport luggage systems, mail automation and water technology. The planned sale of the solar business is “not easy due to the problematic market environment and its handling on the balance sheet must be reviewed,” Kaeser was cited as saying.
The energy division is bearing the brunt of the savings, contributing 3.2 billion euros, while the industry sector will eliminate the greatest proportion of jobs, cutting 4,000 positions. Operating profit at competitor General Electric Co. (GE) represented 12.2 percent of sales in the three months to the end of December, compared with Siemens’ 9.1 percent, according to data compiled by Bloomberg.
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