Manufacturers

Siemens Reports Profit Up, Extends CEO’s Contract

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By DAVID McHUGH ,  AP Business Writer

FRANKFURT, Germany (AP) — Industrial equipment maker Siemens AG said Thursday net profit for the most recent quarter rose 7 percent to 1.46 billion euros ($1.72 billion) — and it announced an extension of CEO Joe Kaeser's contract until 2021.

Profit in the April-June period rose despite costs for the company's merger of its wind power business with Gamesa Corporacion Tecnologica SA.

Kaeser stated, “Our global team delivered a solid quarter with revenue up 8% and net income growing by 7%. Our digital enterprise business impressively underscored its leading position in the market. We are fully on track with Vision 2020 and for another strong year.”

The profit results beat analyst estimates for 1.45 billion euros as compiled by financial information provider FactSet. Revenue rose 8 percent to 21.41 billion euros.

Orders fell 6 percent due to fewer big-ticket jobs, particularly in wind power and the company's power and gas business. That is a key figure for future profits because the company deals in large industrial projects that take months or years to complete.

The company also said it planned an initial public offering of shares in its medical equipment business during 2018.

Kaeser said the company “did not exclude further measures” in response to the reported diversion of four power turbines sold to Russia to Crimea. The European Union in 2014 imposed economic sanctions on Russia over the annexation of Ukraine's Crimean region, including a ban on exporting power generation equipment there.

Kaeser said the Crimea issue “has cost us much time and effort” and said that it was “unacceptable” that a contract would be violated “in criminal fashion.”

He said however that “it would be disproportionate to put an entire country, including loyal and reliable customers, under blanket suspicion.”

He mentioned customers such as Russian Railways and natural gas firms Novatek and Gazprom.

Board Chairman Gerhard Cromme said Thursday that extending Kaeser's tenure would ensure continuity in the Vision 2020 program aimed at streamlining the company's structure and focusing it on growing fields of business.

“We've accomplished a great deal together over the past four years. Vision 2020 has given Siemens a clear direction, and we've significantly increased our company's value,” said Kaeser. “But we still have a long way to go. Together with our global leadership team, we at Siemens want to shape the digital transformation of industry and ensure that our company is well prepared for the next generation.”

The full report can be viewed here.

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