By Christopher Alessi
MUNICH--German industrial conglomerate Siemens AG reported
Thursday a slight decline in net profit for the third quarter of
fiscal year 2015, held back by weak growth in its power and gas
division.
Net attributable profit for the period ended June 30 was EUR1.36
billion ($1.49 billion), compared with EUR1.37 billion during the
same period last year, beating analysts' forecasts. Analysts had
forecast net profit of EUR1.03 billion, according to a recent poll
conducted by The Wall Street Journal.
Revenue rose by 8%, to EUR18.84 billion, a result of strong
growth in the Health care, Energy Management, Digital Factory and
Building Technologies units. New orders increased by 4%, helped by
a EUR1.6 billion long-term train maintenance order in Russia at its
Mobility division.
Siemens reported a third-quarter industrial profit margin of
9.5%, down from 10.1% last year, as profitability in the Healthcare
and Energy Management divisions slightly offset profit declines at
the Power & Gas business. Analysts had expected a profit margin
of 9.2%, according to the Journal poll.
Profit at the Power & Gas unit plummeted by 47%, to EUR289
million, partly hurt by EUR106 million in charges connected with
one project's higher material costs and customer delays. However,
macroeconomic pressures have also "increased price pressure and
over capacities," the company said.
Since taking the helm two years ago, Siemens' Chief Executive
Joe Kaeser has refocused the company on oil and gas, a move that
has been complicated by the plunge in global oil prices over the
past year.
Siemens last year acquired Rolls Royce's energy operations for
$1.3 billion, and, at the end of June, closed its purchase of U.S.
oil equipment maker Dresser-Rand Group, Inc. for $7.8 billion. The
latter deal has faced heavy criticism from some investors who feel
the acquisition was too expensive and poorly timed due to the
plunge in oil prices.
Weakness at the Power & Gas division was partly countered by
strong order growth, at 13%, at the Energy Management business,
helped by large contracts in the Middle East.
Health care also showed strong order and revenue growth, at 15%
and 16%, respectively, led by the imaging and therapy systems
businesses. Health-care profitability rose by 23%, to EUR549
million, boosted by positive currency effects.
Mr. Kaeser last year operationally and legally separated
Siemens's health-care division, which has consistently been one of
the group's most profitable, with a 16.9% profit margin this
quarter. Analysts have long speculated that Mr. Kaeser could divest
the business next year--which requires heavy investment to stay
competitive globally--either through an initial public offering, a
spin off to shareholders or an outright sale.
Siemens reiterated its guidance for fiscal 2015, saying it still
expects to achieve an industrial profit margin between 10% and 11%.
The company also expects basic earnings per share for fiscal 2015
to increase at least 15%, from EUR6.37 in 2014, while revenue
should remain flat year-over-year.
Write to Christopher Alessi at christopher.alessi@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires