Siemens profit beats forecasts helped by accounting gain

By John Revill ZURICH (Reuters) – Siemens <SIEGn.DE> posted better-than-expected industrial profit for its third…

By John Revill

ZURICH (Reuters) – Siemens <SIEGn.DE> posted better-than-expected industrial profit for its third quarter on Thursday, sending its stock higher, as the German engineering group weathered the effects of the coronavirus pandemic.

Orders and revenue both fell during the three months to the end of June, but the trains to industrial software maker still increased the operating profit of its industrial business, helped by an accounting gain and savings to deal with the COVID-19 downturn.

Siemens said adjusted industrial profit for the three months to the end of June rose 8{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 1.79 billion euros ($2.13 billion), beating analyst forecasts for 1.17 billion euros in a company-gathered consensus.

The result was helped by a 211 million euro gain in the valuation of Siemens’ stake in American industrial software company Bentley Systems, which offset declines elsewhere.

The company’s stock reacted positively, gaining 3.25{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} in early trading.

Chief Executive Joe Kaeser, who is due to step down next year as part of previously announced management change, said Siemens had dealt with the crisis better than rivals.

“All in all, our operating performance reflects the fact that we held our own well in a difficult environment – also and above all when compared to our competitors,” Kaeser told reporters.

Like other industrial companies including France’s Schneider Electric <SCHN.PA> and Switzerland’s ABB <ABBN.S>, Siemens has been hit by factory and office shutdowns introduced to prevent the spread of the coronavirus.

On Thursday Siemens said it was accelerating its cost saving programme to deal with the downturn.

The company, which is due to spin off its gas turbine business next month into a new company called Siemens Energy, said its third quarter revenues fell 5{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} to 13.49 billion euros, beating forecasts for 12.75 billion euros.

Shareholder’s net income halved to 539 million euros, although far ahead of the 51 million euros expected by analysts.

Jefferies analyst Simon Toennessen said the results represented a “strong beat,” describing the industrial software business – where sales increased 11{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} – as a “star performer”.

The Munich-based company said it still expects the pandemic to “strongly impact” its business during the current quarter, adding it expected a moderate decline in full year revenues.

Still, Kaeser said he was seeing some signs of recovery in China and Germany, which together make up around a quarter of its annual sales, although he remained uncertain about the United States.

(Reporting by John Revill; Editing by Michelle Martin and Lincoln Feast)