Siemens started the new financial year with a slump in profits. But the climate debate plays a major role at the Annual General Meeting. “Grotesque,” says CEO Joe Kaeser.
Hardly more than a hundred demonstrators had gathered in front of the Munich Olympic Hall to demonstrate against an order for Siemens for a new coal mine in Australia. But the topic played a dominant role at the shareholders’ meeting in the hall.
“You can’t win on such issues,” said the CEO resignedly. The mini order for signaling technology is disproportionate to the Group’s efforts to protect the climate. The dispute over the climate also overshadows the upcoming IPO of the energy division Siemens Energy, which primarily supplies technology for coal and gas power plants.
“Irrelevant to the mine”
Around a dozen representatives of environmental and human rights groups have spoken at the Annual General Meeting or are planning to do so. Supervisory Board Chairman Jim Hagemann Snabe said: “If the discussion has anything good, it is this: We are encouraged to accelerate the change from Siemens towards sustainability.”
Kaeser contradicted the climate protectors’ assumption that an exit from Siemens could bring down the gigantic coal mine. The signaling technology for a railway line to transport the extracted coal to the port is “irrelevant for the commissioning of the controversial mine”.
The Siemens boss described the decision for the order as a mistake: “If we were again in the situation in which we could freely decide, it would certainly be different.”
“Would have been better to do without”
Representatives of large investors also went to court with Siemens for handling the order. Union Investment fund manager Diehl spoke of a “communicative disaster” and an image damage that also put a strain on the start of Siemens Energy on the stock exchange. “With a careful assessment of all environmental and reputational risks, Siemens should never have signed this order.”
Greens chairman Robert Habeck expressed understanding for Kaeser’s stance. “I take it from Mr. Kaeser that he did not take the decision about the signal system for the coal mine in Australia lightly,” he told the “Augsburger Allgemeine” on Wednesday. “Still, I think it would have been better to forego some money to stay true to social goals.”
1.1 billion euros for Siemens Gamesa
Siemens Energy is to be listed separately in September, and Siemens will then sell the majority. The remaining shares are to be sold to the company’s own shareholders. The core of the division is turbines and services for coal, oil and gas power plants. The Siemens Gamesa wind power division, the beacon of hope for the energy transition, even slipped into the red in the first business quarter.
In the evening, Siemens announced the increase in its stake in the Spanish wind power subsidiary Siemens Gamesa. The Munich takeover of the eight percent of the co-partner Iberdrola and thus increase their participation to 67 percent. The purchase price was stated as 1.1 billion euros or 20 euros per share certificate.
Greater scope for action
The spin-off of the energy division and cost reductions are intended to give Siemens greater scope for acquisitions. The “Vision 2020+” should make the technology group more profitable, said the deputy chief executive Roland Busch. “This is the only way to get the freedom we need to invest in the future of Siemens: (…) in the digital transformation of our business, in expanding our business in new growth markets and ultimately in acquisitions as well.”
Further course information on Siemens
Further course information on Siemens Gamesa
Overall, Siemens started the new financial year with a significant drop in profits. The adjusted operating result from the industrial business, the most noted success figure, fell in the first quarter (October to December) by 30 percent to 1.43 billion euros, as the industrial group announced the morning before the general meeting.
Analysts had expected on average 1.88 billion euros. The energy technology business before the spin-off also showed weaknesses – the result dropped by a third – like the figurehead, industrial automation (digital industries).
Annual targets confirmed
This suffered from the downturn in the auto industry and mechanical engineering and also suffered a drop in earnings by a third. Net profit fell three percent to EUR 1.09 billion. Group sales rose slightly by one percent to EUR 20.3 billion.
“We have had better quarters,” said Kaeser. Siemens suffered in the short term from the weakness in the auto industry and mechanical engineering, which is one of the largest customers in the successful Digital Industries division. “This is not a surprise that we cannot digest.”
Outlook confirmed
Nevertheless, CEO Joe Kaeser confirmed the forecasts for the current financial year 2019/20 (until the end of September). According to this, sales are expected to increase moderately on a comparable basis, earnings per share should reach between 6.30 and 7.00 (previous year: 6.41) euros.
The impact of the Coronavirus outbreak in China on business is difficult to assess. A crisis team monitors whether the supply chain is stalled as a result. “You also have to keep calm,” said Kaeser.
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Source: boerse.ard.de
