In the second quarter, Siemens was noticeably impacted by the coronavirus pandemic in the areas of volume, profit and cash. Orders declined 9% on a comparable basis to €15.1 billion, while revenue was flat at €14.2 billion.
With an order backlock at €69 billion and a further €81 billion at Siemens Energy, Group CEO Joe Kaeser said the company “performed solidly” in the second quarter of fiscal 2020.
At €1.6 billion, the adjusted EBITA for Siemens’ Industrial Business was only 18% lower year-over-year, impacted by sharp drop earnings in the energy business and tax expenses for the care-out of Gas and Power. As a result, net income dropped 64% to €697 million
Turn-around expected in Q3
“We delivered a robust quarter given the serious circumstances,” said Joe Kaeser, President and CEO of Siemens AG. He lauded his team for keeping up the original timeline for the spin-off of our energy business, adding “we expect to reach the bottom in the third quarter of fiscal 2020.”
In view of the economic uncertainty arising from the pandemic, Siemens ditched is original guidance for fiscal 2020, but still sees itself “well positioned both operationally and strategically for the coming quarters.
Spin-off of energy business on track
Anticipating an “even stronger impact” of the pandemic on business development in the third quarter and beyond, Siemens noted “reliable estimates are not yet possible” and withdrew its original growth guidance. Instead, the company expects a moderate decline in comparable revenue in fiscal 2020, notable for Digital Industries and Smart Infrastructure.
Despite the current economic uncertainty, Siemens sticks to its plans to spin off and publicly list Siemens Energy before the end of fiscal 2020. Kaeser indicated the company expects to record a spin-off gain.
Financially, Siemens is well prepared for challenges ahead. “We have a strong rating and a very solid liquidity position,” said Ralf P. Thomas, Siemen Chief Financial Officer (CFO). “If needed, we have direct access to more than €11.4 billion in net liquidity.”