Business steady at Siemens after Q4 profits from digital factory jump 28%
Siemens said sales were about square for the year, at €83 billion for the 12 months ended September 30, as a stonking performance for its ‘digital factory’ IoT and automation business, among certain others, offset a decline at its ailing power and gas division.
Profit jumped 28 per cent in the fourth quarter for its digital factory business, finishing at €616 million in the quarter; its power and gas business saw a €139 millionm reverse, down from €292 million in the final quarter of 2017.
Orders in the year were marginally higher, at €91.3 billion.
Profit was down six per cent to €8.81 billion, as it accounted for a September restructuring of its power and gas business, costing 2,900 jobs in Germany, and also incurred income tax expenses from carving-out activities its mobility business.
Siemens priced severance pay for the turnaround in its power and gas division at €301 million; the overhaul is intended to slash about €500 million from the its operating expenses.
Nevertheless, a barn-storming final quarter, one of the best in the German outfit’s history, saw revenue climb two per cent to €22.6 billion, and profit from its core industrial operations also up, marginally, to €2.145 billion, despite the severance costs registering on the books in the period.
Its profit margin on industrial sales was 10.4 per cent in the year, and 9.3 per cent in the quarter, down 0.7 and 0.2 points, respectively.
The company’s success in fourth quarter was down to a higher order intake in nearly all its industrial units, and higher profits in six of eight. In both cases, the performance of its digital factory business was a highlight, with nine per cent revenue growth, and a 28 per cent jump in profits in the three months to the end of September.
Its smart buildings business also performed well, posting revenue and profit growth in the quarter,
Siemens is in the process of combining its five industrial businesses into three, as power, manufacturing, and infrastructure. The changes will take effect from the end of March. It is seeking to combine its railways businesses with French firm
Joe Kaeser, president and chief executive of Siemens, commented: “We again delivered what we promised and fully reached our guidance which we raised at mid-year. This shows the strength of our global team which competed convincingly in both growth markets and difficult environments, and achieved another strong performance. In fiscal 2019 we will give our businesses even greater entrepreneurial freedom, and lay the foundation for execution of Vision 2020+.”