FRANKFURT – Industrial machinery maker Siemens AG says net profit fell 25 per cent in its most recent quarter as lower earnings at its key power and gas business weighed on the bottom line.
Net income fell to 1.1 billion ($2.18 billion) in the October-December quarter, the company’s fiscal first. That was down from 1.46 billion euros a year earlier. The earnings figure fell short of the 1.22 billion euros expected by analysts surveyed by financial information provider FactSet.
Revenues were up 5 per cent to 17.42 billion euros, boosted by favourable currency exchange rates.
CEO Joe Kaeser said Tuesday net profit was hurt by a reassessment in the value of financial derivatives the company holds due to low interest rates. That came on top of a 39 per cent drop in profits at its business making gas-fired turbines that generate electricity.
Another pillar of the company’s business, its health care business that specializes in diagnostic machines, saw a 13 per cent fall in profits.
The Munich-based company stayed with its forecast that selling businesses will enable a 15 per cent increase in profits this year on flat revenue. Yet orders — a key factor in future earnings — declined 11 per cent to 18.01 billion euros. That was partly due to a large, 1.6 billion euro order in the year-earlier quarter for a subway in Riyadh, Saudi Arabia.
Siemens shares traded down 3.6 per cent at 99.36 euros in morning trading in Europe.