Siemens Healthineers boosts Q1 profits despite flat sales

The healthcare business at Siemens (NYSE:SI), Healthineers, boosted its fiscal 1st-quarter profits by nearly 15% despite flat sales, as the German industrial conglomerate’s shares surged to a 17-year high on its overall profit increase of nearly 25%.

Siemens Healthineers, which is being prepped for an initial public offering, reported profits of €620 million ($668.8 million) on sales of €3.28 billion ($3.54 billion) for the 3 months ended Dec. 31, for bottom-line growth of 14.6% on a -0.2% sales decline.

Quarterly profits for the entire enterprise were €1.94 billion ($2.09 billion), or €2.32 ($2.50) per share, on sales of €19.12 billion ($20.62 billion). Analysts were looking for earnings per share of €1.66 on sales of €19.56 billion.

“With a strong first quarter and a considerably raised outlook for fiscal 2017, we are sending a clear signal. I am proud of my global Siemens team that has been working hard and has delivered convincing success. We will continue to rigorously execute our strategy program Vision 2020 to even further strengthen our innovation power and customer proximity,” said Joe Kaeser, president & CEO.

Siemens raised its earnings outlook for fiscal 2017, saying it now expects to log EPS of €7.20 to €7.70, up from prior guidance for €6.80 to €7.20.

“We anticipate increasing headwinds for macroeconomic growth and investment sentiment in our markets due to the complex geopolitical environment. Therefore, we continue to expect modest growth in revenue, net of effects from currency translation and portfolio transactions,” the company said.

Investors pushed Siemens shares to a 17-year high of €122.14 today in Amsterdam; the stock was trading at €121.60 per share as of about 2 p.m. there today.

Last week news surfaced that the Munich-based company plans to invite investment banks in early April to pitch for roles in an initial public offering; Goldman Sachs has already been asked to look after some preparatory tasks for the IPO. The healthcare business, which Siemens rebranded last year to worldwide scorn, is the company’s most profitable unit, with an estimated enterprise value of roughly €36 billion to €37 billion ($39 billion to $40 billion).

Siemens also said today that chairman Gerhard Cromme plans to step down next year; Cromme is slated to be replaced by former SAP co-CEO Jim Hagemann Snabe.

“Digitalization poses major challenges for society and for companies. With its magnificent, innovative products, Siemens is very successful in today’s market. However, the digitalization transformation is also changing our business. Mr. Snabe has in-depth industry expertise in software and digitalization. This recommendation sets the course for long-term succession planning and continuity in Siemens’ supervisory board,” Cromme said in prepared remarks.

($1 = €0.9271)

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