Industrial Division Cuts Into Siemens 1Q

German industrial giant Siemens AG said declining profits at its industrial division weighed on the first quarter as the renewables energy revolution continued to eat into its traditional power-and-gas business.

Net profit for the fiscal first-quarter ended December 31 was 2.21 billion euros ($2.75 billion) compared with EUR1.98 billion in the same period the previous year, beating analysts' forecasts of EUR1.89 billion, according to a recent poll compiled by FactSet.

But profit at its closely-watched industrials division plunged 14% as new power generation sources such as solar and wind continue to pressure Siemens's traditional strength in supplying equipment such as gas turbines to electricity power generators.

The company's first-quarter net profit still rose due to a boost from U.S. tax cuts and the sale of Osram Licht AG.

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 reforms. 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.

Write to Nathan Allen and William Wilkes at nathan.allen@dowjones.com and william.wilkes@wsj.com

(END) Dow Jones Newswires

January 31, 2018 05:51 ET (10:51 GMT)