Siemens 3Q Net Profit Fell as Margins Were Hit by Severance Charges -- Update

--Siemens net profit fell 6.7%

--Margins missed consensus, hit by severance charges

--The company confirmed its FY19 guidance

 
   By Nathan Allen 
 

Siemens AG (SIE.XE) said Thursday that net profit fell in the third quarter of its fiscal year partly due to higher severance charges, which held back margins.

Net profit at the German engineering group fell to 1.03 billion euros ($1.13 billion) from EUR1.11 billion a year earlier. Revenue climbed to EUR21.28 billion from EUR20.47 billion in the quarter ended June 30, while orders booked over the period grew 8% to EUR24.51 billion, the company said.

Weaker earnings at Siemens's digital industries and gas-and-power units offset gains at the group's mobility unit and health-care subsidiary Siemens Healthineers AG (SHL.XE), the company said.

Heavy severance charges weighed on Siemens's industrial profit margin, which declined to 9.6%, undershooting a company-compiled consensus estimate of 10.8%.

The company is laying off thousands of workers from its gas-and-power business, which has been struggling for years amid a broad-based decline in demand for fossil-fuel power generation.

Siemens confirmed its guidance for the year ending Sept. 30, but said a significant deterioration in the market environment for its short-cycle businesses will make its target of moderate revenue growth more difficult to achieve.

Siemens said it expects the adjusted margin on earnings before interest, taxes and amortization excluding severance charges for its industrial business to reach the lower half of the targeted 11% to 12% range.

"A robust mobility sector and stringent project execution will help us make good on our promises for the year," Chief Executive Joe Kaeser said.

Write to Nathan Allen at [e-mail]

(END) Dow Jones Newswires

August 01, 2019 02:00 ET (06:00 GMT)

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