By Christopher Alessi
German engineering company Siemens AG (SIE.XE) is scheduled to
report its earnings for the first quarter of fiscal year 2015
before the market opens Tuesday. It will also hold its Annual
General Meeting the same day. Siemens will report first quarter
results with its new divisional structure. Here's what you need to
know:
EARNINGS FORECAST: Analysts forecast earnings per-share of
EUR1.50, compared with EUR1.60 last year, according to a poll by
The Wall Street Journal. Siemens said in November it expects
per-share earnings to rise 15% this year, compared with EPS growth
of 25% in 2014.
REVENUE FORECAST: Analysts predict revenue to grow 2% to
EUR17.16, compared with EUR16.82 during the same period last year,
according to the poll by the Journal. The company expects revenue
to remain flat in 2015 year-on-year.
WHAT TO WATCH:
--POWER & GAS: There are two concerns surrounding this EUR14
billion business, say analysts at Morgan Stanley: the timing around
Siemens's $7.6 billion acquisition of U.S. oil equipment
manufacturer Dresser-Rand Group (DRC) and "competitive dynamics in
the core gas turbine operations" in light of the GE-Alstom merger.
Analysts expect Power & Gas sales in 2015 to be down as a
result of weak European power plant markets, declines in the
high-margin advanced gas turbine market, and short-term pressure
due to the low oil price. Analysts forecast first-quarter profit
margin for Power & Gas to fall to 13.9% from 18.2% a year
earlier.
--HEALTHCARE: Analysts at RBC Capital Markets forecast 2015
divisional sales to grow 2% year-on-year, helped by growth in
developing markets. Margins should stay the same as 2014, at 17.2%,
RBC said. The healthcare business is now managed as a separate
business entity within Siemens, and analysts have predicted Chief
Executive Joe Kaeser could divest the lucrative business this year
or next. Morgan Stanley values the business at roughly EUR23
billion. Analysts forecast first-quarter profit margin for
Healthcare to drop to 16.3% from 17.6% the previous year.
--DIGITAL FACTORY/PROCESS INDUSTRIES & DRIVES: These short
cycle businesses should see low growth in 2015, according to
analysts at Jefferies. But an improvement in the global
macroeconomic environment--including an upswing in Europe--could
quickly reverse this trend, analysts at RBC say. Analysts forecast
first-quarter profit margin for Digital Factory to increase to
17.9% from 17.8% and profit margin for Process Industries and
Drives to rise to 8.2% from 7.4% last year.
Write to Christopher Alessi at christopher.alessi@wsj.com
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