German industrial group Siemens said yesterday its net profit fell by half in the most recent quarter, to 1.12 billion euros ($1.28 billion), due to higher taxes and falling demand for its big-ticket power turbines as utilities turn to renewable energy.
Net profit for the quarter ending Dec. 31, the company's fiscal first, was off 49 percent from 2.21 billion euros in the year-earlier quarter, when the company booked U.S. tax gains and received one-time revenue from the sale of shares in lighting company OSRAM Licht AG. Revenue fell 1 percent to 20.1 billion.
Siemens CEO Joe Kaeser cited stronger order intake as a positive for future earnings but said the company has "much to do" to achieve industry-leading profit margins. Siemens AG makes power generating and transmission equipment, factory automation systems, medical scanners and trains. The company based in Munich said it still intends to complete the merger of its trains business with France's Alstom SA in the first half of the year. The companies have offered changes in the deal to try to overcome objections from EU competition authorities. A decision is expected Feb. 18. The profit result was short of estimates for 1.15 billion euros net profit as compiled by financial information provider FactSet.
Demand for turbines to generate electricity from fossil fuels has fallen as countries and utilities move toward renewable sources of energy such as wind and solar power. The company's power and gas division saw operating earnings fall by 50 percent. Orders rose 13 percent to 25.2 billion euros, boosted by 1.6 billion euros for trains for the London Underground and an 800 million-euro order for 32 trains from VIA Rail Canada.