Egypt Boosts Siemens Earnings
German engineering giant Siemens recorded strong rise in profit in its second quarter 2016 which ended March 31, spurred by a growth in orders for gas-fired power plants and wind turbines.
Operating profit in its industrial business rose 28% to €2.12bn, from €1.66bn in its Q1 period (October-December 2015). Net profit fell 63% to €1.44bn, because the 2015 figure was inflated by €3bn of one-off gains.
Major orders in Egypt (gas-fired power plants) and the UK (windfarms) helped drive the group's second-quarter orders up 7% year-on-year to €22.3bn.
Its industrial business profit margin rose to 10.9%, from 9% last year. Consensus forecast for this number was 9.8%.
Its power and gas business profit margin rose to 10.8% in the quarter, before restructuring costs.
Profitability was boosted by the company's resumption of business activities in Iran following the lifting of international sanctions earlier this year.
Siemens also benefited from a €3.1bn order from Egypt during the January-March quarter for the new Burullus and New Capital power plant orders, including long-term service contracts. Project execution of a prior Egyptian order also progressed, with 4 out of 8 turbines shipped to the country.
After 35 years at Siemens, Anton Huber is retiring and being replaced by Jan Mrosik who has been the co-CEO of the Energy Management division.
The company maintained its guidance for the current fiscal year (October 2015 to September 2016), but said the market environment for its high-margin short-cycle businesses "may not pick up materially" in April to September 2016 as much as originally forecast. It expects earnings per share in a range of €6 to €6.40.
On May 3, German businesses took part in a trade gathering in Tehran. Junior economy minister Uwe Beckmeyer said: "The major participation of over 100 German businessess is a signal to Iran, that Germany is ready to revive its trade relations that grew over many years with know-how and innovative technology."
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