FRANKFURT, GERMANY – German industrial conglomerate Siemens on Thursday reported a drop of around a third in annual profits due primarily to problems at its former energy unit.
The company, which makes products ranging from trains to factory equipment, said net profits were around US$4.6 billion (4.4 billion euros) in the 2021-22 fiscal year, down 34 percent.
The fall was due mainly to a $2.8 billion (2.7-billion-euro) devaluation in the third quarter related to its stake in Siemens Energy, said the company.
Siemens Energy was spun off in 2020 from Siemens, which still owns a 35 percent stake.
Siemens Energy’s loss-making wind turbine maker subsidiary, Siemens Gamesa, has faced huge struggles, and announced in September that it would cut about 11 percent of its total workforce.
The company’s difficulties are linked to soaring commodity prices and increased competition from low-priced rivals especially from China.
Siemens, which is based in Munich and runs its business year from October to September, also took a hit of around $310 million (300 million euros) in the fourth quarter from its move to wind down activities in Russia due to the Ukraine war.
There were some bright spots, however.
Net profit in the fourth quarter more than doubled to $3billion (2.91 billion euros).
Revenue in the 2021-22 fiscal year was up 16 percent while operating profit also rose strongly.
“Despite a continuing complex macroeconomic environment influenced, among other things, by economic sanctions on Russia, high inflation and the impact of the Covid-19 pandemic, Siemens grew again in all key markets,” said the company.
Siemens expects continued growth in 2023, assuming that “geopolitical tensions do not further escalate and challenges from COVID-19 and supply chain constraints continue to ease”.
It expects revenues to grow six to nine percent.
