Siemens Profit Beats as Software Unit Makes Up for Industrials

Siemens AG’s operating profit rose in the third quarter as Europe’s largest engineering company dealt with the coronavirus crisis better than expected.

Adjusted earnings before interest, taxes and amortization from its industrial business climbed 8% to 1.79 billion euros ($2.13 billion) thanks to cost savings and a one-time reevaluation at its software division, it said Thursday. That beat analysts’ average estimate of 1.2 billion euros.

The Munich-based company stuck to its reduced outlook for a moderate decline in revenue, and said it couldn’t make a reliable forecast for earnings per share or net income for the year. Siemens dealt with the Covid-19 crisis better than some of its car-industry and industrial clients that faced historic slowdowns in part because it was able to keep factories running virtually uninterrupted.

“Despite the severe global crisis, we delivered strong operating performance,” Chief Executive Officer Joe Kaeser said in a statement.

Siemens’s earnings round out a tough quarter for industrial companies. General Electric Co.’s orders in the second quarter were hit hard, though most of the trouble comes from the company’s aviation business, which Siemens does not share. ABB’s second-quarter earnings and sales came in higher than expected, as the Swiss industrial giant was helped by a strong rebound in China.

Siemens’s group sales declined 5% in the period and, at 13.5 billion euros, came in better than expected. A 62% rise in profit at the company’s software business — bolstered by a 211 million-euro reevaluation of a stake in U.S. software developer Bentley Systems Inc. — made up for declines in all other divisions

Kaeser, once he finishes his tenure as CEO next year, will leave Siemens a transformed company that bears little resemblance to the one he took over in 2013. The engineering giant is spinning off its energy activities into a firm named Siemens Energy AG. The new company, with almost 29 billion euros in annual revenue, is scheduled to begin trading on Sept. 28.

Siemens picked advisers for another potential spinoff of its smaller Flender mechanical drive business, a deal that could value the unit at more than 1.5 billion euros, people familiar with the matter told Bloomberg News on Wednesday.

What’s left of Siemens will focus on factory automation and software, along with a unit that makes trains. Chief Technical Officer Roland Busch, who will succeed Kaeser, already oversees much of the day-to-day responsibilities for those divisions.

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