German conglomerate Siemens AG said its quarterly profit plummeted at its core industrial division as a global switch to renewable energy continued to eat into its gas-and-oil business.
The closely watched industrial division, which makes traditional power-generation equipment such as gas turbines, recorded a 14% drop in profit in the three months to Dec. 31.
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Leading suppliers to the power sector, including Siemens and General Electric Co., have been hit hard by the extent and speed of the sector's switch to renewable energy, which has hit orders for their equipment and forced them to slash capacity.
Siemens in November said that demand for gas turbines that generate more than 100 megawatts in electricity has dropped to 110 turbines a year, far less than the global factory capacity of around 400 turbines spread across Siemens and its competitors.
Siemens said in November it would cut 6,900 jobs from its power division. The next month, GE said it would shed 12,000 jobs at its equivalent unit.
A boost from U.S. tax cuts and the sale of Osram Licht AG helped Siemens as a whole post a rise in net profit to EUR2.21 billion from EUR1.98 billion a year earlier, beating analysts' forecasts of EUR1.89 billion, according to a recent poll compiled by FactSet.
The company said it received a boost from "sharply lower income tax expenses" stemming from the revaluation of future tax liabilities following the recent U.S. tax overhaul. Siemens booked a EUR655 million gain from the sale of Osram, a market leader in automotive lighting, to institutional investors. That sale was completed in October.
Siemens reiterated its fiscal 2018 guidance of an 11-12% margin at its industrial business and basic earnings per share in the range of EUR7.20 to EUR7.70.
The company also said it expects markets to remain challenging partly because of geopolitical uncertainties.
Nathan Allen contributed to this article.
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(END) Dow Jones Newswires
January 31, 2018 06:24 ET (11:24 GMT)