MarketBy-product of billions of dollars: Siemens plans big

By-product of billions of dollars: Siemens plans big

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Despite spending billions, Siemens has made huge profits, and shareholders can be happy. The group is optimistic about the new fiscal year and is planning a split.


Siemens is optimistic for the year ahead: in the fiscal year ending September, special effects have slashed profits, but the group expects a strong rise in the new year, as announced on Thursday. The reason: if the core business is growing rapidly and parts that don’t belong there are sold or split up, Siemens has much bigger plans for the next step.

Siemens plans major split

Siemens has been working to phase out the Large Disks (LDA) business for some time now. CEO Roland Busch has now announced that the split will be about twice as large. LDA will be combined with low-voltage and geared motors from the Motion Control division, manufacturing technology subsidiary Sykatec, and privately owned Weiss Spindeltechnologie.

Overall, a new unit with a turnover of around three billion euros and 14,000 employees will be created during the financial year. “The new company will be extremely competitive,” Busch said. CFO Ralf Thomas highlighted:

Just because Siemens isn’t a core business doesn’t mean it isn’t a good business.

Ralf Thomas, CFO of Siemens

IG Metall: Probably ‘cheapest alternative’

Hagen Reimer, trade union secretary for Siemens at IG Metall states:

We remain extremely skeptical about the partition itself.

Hagen Reimer, union secretary

But if it cannot be avoided, “then we think it is the most appropriate perspective in its current expanded form. This means that the future company is the most stable and broadest.”

“Challenging Year” and “Outstanding Achievement”

Basically, things are going well at Siemens: the result in the central industrial business was at a record level last fiscal year. Still, profit fell 34 percent to 4.4 billion euros, driven by a billion-dollar summer depreciation in the remaining stocks of former energy business Siemens Energy. Depreciation brought the group first-quarter losses for over a decade.

However, the withdrawal from Russia also negatively affected the business world. However, sales rose by almost 16 percent in nominal terms to 72 billion euros. Backlog orders reached a record level of 102 billion.

Dividend rises, stock market reacts positively

In the fourth quarter of the year, everything was fine at Siemens with a huge profit of 2.9 billion euros. But a substantial profit from the sale of mail and parcels also contributed to this.

For the current new fiscal year, Siemens expects a significant increase in profits. Adjusting for purchase price effects, it is expected to increase from €8.70 to €9.20 per share. This would be an increase of 59 to 68 percent. Roughly speaking, it would be around 7.2 billion euros for this group.

Shareholders will feel nothing from last year’s drop in profits: the dividend will increase by 25 cents per share to 4.25 euros. The stock market reacted very positively to the news from Siemens on Thursday: The stock was by far the biggest gainer in the leading Dax index in the morning.

Source: ZDF

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