Modest Sales Growth Forecast By Siemens As It Speeds Up Cost Saving

With speeding up measures for cost savings in the wake of the novel coornvirus pandemic, the German engineering group Siemens said it expects to register a “modest” improvement in orders and revenue within the next few months.

While raining forecast for its earnings as it cut costs and had benefited from an accounting gain, the trains to industrial software-maker reported lower sales and orders on Thursday.

Even though the business situation in eth United States remained uncertain, some signs of improvement in markets like China and Germany were being seen by the company. Its Chief Executive Joe Kaeser said.

The closure and shutdown of factory and office during the lockdown implemented to prevent the spread of the novel coronavirus has hit Siemens hard just like its per and other industrial companies including France’s Schneider Electric and Switzerland’s ABB.

Kaeser said that the business of the company of supplying the food and beverage sector and data centres had been performing well during the quarter because of trends such as an increase in video conferencing during the pandemic.

“We expect modest sequential growth in both orders and revenues,” Kaeser told reporters. The company expects to see this trend in the coming months particularly in its flagship factory automation unit Digital Industries, Kaeser added.

“We do expect a decent quarter in Q4 … But we will certainly not see year over year growth,” he added, referring to the July to September period.

After having headed the company since 2013, Kaeser is set to relinquish his post in February. The new chief of the company would be Deputy CEO Roland Busch who will take up charge from October 1 – the start of business year for the company.

There was an 8 per cent growth in operating profit at its industrial business at 1.79 billion euros ($2.13 billion) during the May to June period which beat forecasts of analysts at 1.17 billion euros in a company-gathered consensus.

The result was helped by a 211 million euro gain in the valuation of Siemens’ stake in American industrial software firm Bentley Systems, offsetting declines elsewhere.

Forecasts for sales and orders were also beaten by the company for the quarter even though there was a decline year on year.

The performance of the company saw its shares jump by 2.6 per cent which made it the best performing industrial stock in Europe.

The earnings were called a “strong beat” and the industrial software business – where sales increased 11% a “star performer” by Jefferies analyst Simon Toennessen.

Siemens said it was accelerating cost savings to deal with the downturn and would maintain its policy of paying out 40% to 60% of its after-tax profits to shareholders.

(Adapted from SRNNews.com)

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