Siemens confident for coming year but job cuts loom

German industrial behemoth Siemens reported a leap in profits in its 2016/17 financial year, meeting its own forecasts even as headwinds for its energy units threaten to spark mass layoffs.

Net profits at the group, whose products range from wind turbines to trains to medical equipment, grew to 6.0 billion euros ($7 billion), up 11 percent compared with the previous year.

The group's fossil and renewable energy divisions struggled, while its smaller activities like transport and factory automation powered growth.

Operating, or underlying profit grew 12 percent year-on-year, to 8.3 billion euros, while revenues added 4.3 percent to top 83 billion euros.

Chief executive Joe Kaeser praised the "excellent results" in a statement, but warned that "we have to tackle structural issues in some individual businesses" in the coming year.

Kaeser took the reins in 2013, hoping to refocus sprawling Siemens as he sold off activities including domestic appliances, telecom networks, solar energy and lightbulbs.

The group will not be spared "painful cuts" in 2017/18, the boss predicted.

In its statement, Siemens forecast a "mixed picture in our market environment", with continuing headwinds for its energy units from an unfavourable business cycle and "geopolitical uncertainties that may restrict investment sentiment" in the 2017/18 financial year.

Only "modest growth in revenue" is on the cards, with a profit margin of between 11 and 12 percent for its industrial businesses and earnings per share of between 7.20 and 7.70 euros -- compared with 7.38 euros this year.

- Spinning down -

Siemens' present difficulties focus on its power and gas division, the largest in the conglomerate.

The unit, which employs 30,000 people worldwide making the turbines and generators at the heart of fossil-fuel plants, saw lower profits as prices fell and fewer new orders rolled in.

German weekly Manager Magazin reported that the Munich-based group could sell off or shutter up to 11 of the power and gas division's 23 sites.

Profits also fell at Siemens' wind power unit, which merged with Spain's Gamesa earlier this year.

On Monday the division announced some 6,000 job cuts spread across 24 countries, as profits and margins have fallen even though orders are on the rise.

"We will do everything we can to... soften the blow," CEO Kaeser said at a press conference, setting a November 16 deadline to unveil details of the layoffs.

Despite the tough beginnings for the wind power division, he believes Siemens can become "the biggest provider of renewable energy worldwide" -- taking the opportunity to mock Donald Trump's scepticism over climate change.

Trump "hasn't yet put in place everything he promised, and that may not be the worst thing," Kaeser said.

Siemens Mobility, the group's transport unit, is in good health after recently announcing a merger with France's Alstom set to create a European rail giant.

And the group's medical devices business, Healthineers, is set for a stock market flotation in early 2018.

Nevertheless, investors remained unsure of Siemens in the wake of its earnings statement, with shares in the group losing 1.6 percent to trade at 121.35 euros in Frankfurt by 1100 GMT, among the worst performers in the DAX index of German blue-chip shares.

Source: AFP