Siemens Healthcare’s Q2 sales, earnings rise

Siemens (NYSE:SI) posted single-digit sales and earnings increases for its healthcare business during its fiscal 2nd quarter on strong contributions from its diagnostic imaging business and currency hedges.

Siemens Healthcare’s profits were up 5.5% to $482.8  million (€555 million) on sales growth of 3.3% to $2.89 billion (€3.32 billion).

Overall profits for the German industrial conglomerate plunged -62.1% to $1.29 billion (€1.48 billion), or $1.55 (€1.78) per share, on sales growth of 5.2% to $16.52 billion (€19.0 billion) compared with Q2 2015. But Siemens said that quarter included a $3.0 billion gain on the sale of its hearing aid business and the divestiture of its stake in BSH appliance business.

“We delivered another convincing performance in the 2nd quarter, compared to both the prior year and our industry sector. Despite ongoing challenges in the market environment, we will continue to focus rigorously on profitable growth,” president & CEO Joe Kaeser said in prepared remarks.

Siemens shares rose 2% to €91.78 in early trading, outpacing the German blue-chip index, which rose 0.1%.

“Execution was solid across the board in both short and long cycle,” wrote Barclays capital goods analysts, who rate Siemens “equal weight/neutral.”

Kaeser was cautious on recovery in the short-cycle businesses, including automation projects and primarily housed in the digital factory division.

“We assume the bottom has been reached in our short-cycle businesses. However, over the next few quarters we expect slower recovery rather than material growth,” he said.

Siemens said yesterday that it plans to replace the CEO of the Digital Factory division – Anton Huber, who will retire in October – with 51-year-old energy management chief Jan Mrosik.

Siemens accelerated a cost-cutting program and lifted its savings target for the year to €850 million to €950 million ($739.4 million to $826.4 million) from €800 million to €900 million ($695.9 million to $782.9 million) previously.

The Munich-based group confirmed it expects moderate revenue growth for its fiscal year to end-September,  and earnings per share of €6.00 to €6.40 ($5.22 to $5.57).

Arch-rival General Electric last month confirmed its target of 2% to 4% revenue growth for 2016 – a forecast that met with some skepticism due to sluggish demand for oil and gas equipment and a weak industrial economy.

($1 = €0.8698)

Material from Reuters was used in this report.

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