Siemens Profit Margin Shows Strength -- WSJ

German industrial giant Siemens AG said second-quarter net profit was little changed from the year before, as lost income from discontinued operations weighed on otherwise robust profit margin growth at most of its industrial businesses.

Net profit for the fiscal second-quarter ended March 31 was EUR1.45 billion ($1.58 billion) compared with EUR1.44 billion in the same period last year, roughly in line with analysts' forecasts of EUR1.43 billion, according to a recent poll compiled by FactSet.

The profit margin for the group's industrial businesses climbed to 12.1% from 10.9% a year earlier, driven by profitability at the separated health care business and the digital factory unit. Profitability was also helped by a EUR138 million gain from pension plan amendments, the company said.

At the consistently lucrative health care unit, which Siemens legally separated in 2015 and is preparing for a potential listing this year, profitability was driven by the advanced therapies business.

The digital factory unit, which supplies factory automation equipment and industrial software, was boosted by demand at its high-margin, short-cycle businesses, particularly in China.

That division has taken center stage as Siemens seeks to be a leader in the Industrial Internet, which seeks to marry the Internet of Things with heavy industry. As part of that effort, the company at the end of the second quarter closed a $4.4 billion acquisition of U.S.-based automation and industrial software provider Mentor Graphics Corp.

Quarterly revenue rose 6% to EUR20.22 billion, boosted by strong growth at the digital factory, building technologies and energy management divisions.

Orders rose slightly, by 2%, to EUR22.63 billion, helped by a EUR1.4 billion contract at its wind energy and renewables business for an offshore wind farm in Germany.

At the start of the current quarter, Siemens closed the merger of its wind power business with Spain's Gamesa Corporacion Tecnologica SA Siemens holds a 59% stake in the new entity, known as Siemens Gamesa Renewable Energy.

Siemens reiterated its guidance for fiscal 2017, saying it continues to expect an industrial profit margin between 11% and 12% and basic earnings per share in the range of EUR7.20 to EUR7.70.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

May 05, 2017 02:48 ET (06:48 GMT)