Siemens AG’s profit rose 8 percent in the third quarter as Europe’s largest engineering company dealt with the coronavirus crisis better than expected.
Adjusted earnings before interest, taxes and amortization from its core industrial business climbed to EUR 1.8 billion, bolstered by cost savings, China’s recovery and a one-time reevaluation at its software business, Siemens said Thursday. That beat analysts’ average estimate of EUR 1.2 billion.
"Despite the severe global crisis, we delivered strong operating performance," Chief Executive Officer Joe Kaeser said in a statement.
Siemens dealt with the Covid-19 crisis better than some of its car-industry and industrial clients that faced historic slowdowns, partly because it was able to keep factories running virtually uninterrupted. The Munich-based company stuck to its reduced outlook for a moderate decline in revenue, and said it couldn’t make a reliable forecast for earnings per share or net income for the year because of the uncertainty due to the pandemic.
Siemens’s earnings round out a tough period for industrial companies. General Electric Co.’s orders in the second quarter were hit hard, though most of the trouble stems from the company’s aviation business, which Siemens does not share. ABB’s second-quarter earnings and sales also came in higher than expected, as the Swiss industrial giant was helped by a strong rebound in China.
Siemens’s group sales declined 5 percent but still came in better than expected after growth at its mobility division, which secured deals including a 1.1 billion-euro order from German railway operator Deutsche Bahn AG.
A 62 percent rise in profit at the software business – bolstered by a raised valuation of a stake in US software developer Bentley Systems Inc. – countered earnings declines in other areas.
Kaeser, once he finishes his tenure as CEO next year, will leave Siemens a transformed company that bears little resemblance to the one he took over in 2013. The engineering giant is spinning off its energy activities into a firm named Siemens Energy AG. The new company, with almost EUR 29 billion in annual revenue, is scheduled to begin trading on Sept. 28.
Siemens picked advisers for another potential spinoff of its smaller Flender mechanical drive business, a deal that could value the unit at more than EUR 1.5 billion, people familiar with the matter told Bloomberg News on Wednesday.
What’s left of Siemens will focus on factory automation and software, along with a unit that makes trains. Chief Technical Officer Roland Busch, who will succeed Kaeser, already oversees much of the day-to-day responsibilities for those divisions.