Drastic profit collapse at Siemens

In the 1st quarter 2015 (Sept. – Dec. 2014) the group’s net profits slumped by 25% to EUR 1.1 bn.

Besides noticeable drops in earnings in the two important energy and gas and medical technology divisions it is also said to be major encumbrances in the financing sector because of the lower level of interest rates and the decline of the euro together with the price of oil which are responsible.

Siemens’ boss Kaeser still appeared to be convinced that overall profits will increase by at least 15% in the year, since he says extraordinary profits from the sale of a number of activities are to be expected.

For instance, the sale of the domestic appliance business to Bosch and the sale of the hearing aid business will alone yield over three billion euros in pre-tax profits. Nevertheless, he goes on to say that there is urgent need for action, above all in the group’s largest division energy and gas: The former world leadership in large gas turbines is a thing of the past, the market is determined by price pressure and excess capacity and the number of tenders is falling.

The first savings measure is now likely to be the cutting of 1,200 jobs in the division on short notice.