Siemens Power & Gas Unit Suffers in Q2

German engineering giant Siemens reported August 2 a 14% drop in its Q3 FY (April 1-June 30) net income, at €1.21bn ($1.4bn), which it attributed to higher income tax. Revenue was down 4% to €20.47bn owing to negative currency translation effects; on a comparable basis, revenue was flat with increases in the majority of industrial businesses offset by significant declines in Power and Gas (P&G), it said.

Despite higher volume from large orders which included contracts worth €0.4bn each for combined-cycle power plants in Israel and the UK, including service, P&G suffered a "substantial revenue decline" of 16% to €3bn. Profit was down 56% to €164mn on the same period last year, owing to lower revenue, price declines and low capacity utilisation; and the profit margin was almost halved, from 9.7% to 5.4%. Last year revenues were boosted by large orders in Egypt.

It said global energy trends "continue to structurally reduce overall demand in markets for the division’s offerings, resulting in declining new-unit large turbine business and corresponding price pressure due to structural overcapacities and aggressive competitive behaviour.

On a nominal basis, Siemens said, orders overall had climbed 16% to €22.8bn driven by a higher volume from large orders. CEO Joe Kaeser said: "Our global team delivered a strong quarter, highlighted by outstanding order intake, outperforming the market. We diligently address our opportunities and challenges going forward."