Siemens’ shareholders’ net profit tanks 64% as Coronavirus weighs on performance

Siemens AG (ETR: SIE) said on Friday that its industrial profit came in 18% lower in the second quarter. The company also withdrew its previous full-year guidance for 2020 and warned that the impact of the Coronavirus pandemic on its performance is expected to be more pronounced in the third quarter.

Originally, Siemens had estimated moderate growth in its full-year revenue this year. Following the Q2 earnings report, however, the company revised its revenue guidance to a moderate decline in 2020.

As COVID-19 restricts people to their homes and disrupts the company’s supply chain, CEO Joe Kaeser said that the impact of the health crisis is expected to hit its peak in the third quarter. What’s more important, he added, is to predict how long will the impact last.

Siemens expects the trough to last for 2 to 3 quarters

According to the Chief Executive Officer, Siemens is bracing for the trough to last for two to three quarters before substantial recovery can be expected. As per Kaeser:

“Generally, we believe that before we don’t have any test or any vaccine, we are not going to go back to normal at all.”

Siemens also said on Friday that it expects its flagship businesses including factor automation and smart infrastructure to take the hardest hit due to the pandemic.

At £571.45 million, Siemens’ net profit attributable to shareholders came in 64% lower than the same quarter last year. The company announced a hit to all of its operations in the recent quarter due to COVID-19.

Siemens’ group orders saw an 8% decline in Q2 to £13.28 billion while its industrial business recorded £1.39 billion of adjusted quarterly operating profit that translates to an 18% year over year decline.

The German multinational conglomerate’s quarterly revenue remained unchanged at £12.47 billion attributed to upbeat performances from Siemens Healthineers and the company’s train-making mobility segment that helped offset the plunge in Digital Industries.

Siemens Energy to go public in September 2020

Siemens did not include the results from Gamesa Renewable Energy and Siemens Gas and Power in its earnings report on Friday. Siemens plans on turning these businesses into a separate company by the name of Siemens Energy that is scheduled to go public in September.

As per the sources, Kaeser will take on the role of chairman at Siemens Energy followed by his departure as the CEO from Siemens AG in early 2021.  

Siemens also expressed plans of making Flender a separate company as well. This mechanical drive manufacturing unit currently boasts £1.75 billion of annual sales. Europe’s largest industrial manufacturing company will finalise the decision based on shareholders’ voting in its annual general meeting next year in February.

The £66.23 billion company is currently around 25% down year to date in the stock market.