THE CHIEF financial officer of Siemens has indicated that it will be more difficult to meet financial targets set for 2012 as demand tapers off at some industrial automation units and Chinese growth fails to pick up.
“Unfortunately,” Joe Kaeser said yesterday, “what we have been seeing in the last eight weeks was that short-cycle businesses are being considerably weaker than we have been originally thinking. It’s going to be quite a rocky road to meet the targets for 2012.”
Mr Kaeser said China would remain weak this year, depressing sales to one of the biggest customers of Siemens’ high-speed trains, factory gear and turbines.
Chinese growth has slowed, prompting China’s central bank to cut borrowing costs for the first time since 2008 this month and risking an open flank for German exporters which are the backbone of Europe’s largest economy.
Siemens fell as much as 3 per cent, to €62.13, after Mr Kaeser’s comments, the most in 25 days. The stock has lost 15 per cent this year, valuing Siemens at €57.2 billion.
Siemens cut its full-year profit goal in April, citing costs to build out windmill parks. Siemens now predicts net income from continuing operations of €5.2 billion to €5.4 billion in the year through September, down from a €6 billion target.
Siemens has pushed back its predictions that economic growth will resume in China in the latter half of 2012, due in part to the country’s tightening of its monetary controls.
“We expect a very weak China for the remainder of fiscal 2012 and a resumption of growth in order to make good on their five-year plan in 2013,” Mr Kaeser said.
Siemens is largely unaffected by the economic decline in southern Europe, where the company gets only 6 per cent of revenue, although it did have contingency plans to react to a break-up of the single currency, he added.
Mr Kaeser said Europe continued to be a “basket case” and Siemens was watching developments in China. He also said Siemens still planned an initial public offering for its Osram lighting subsidiary, after putting off the plan last year because of market conditions. If market conditions did not warrant the offering, Siemens would consider a “dividend in-kind spin-off” in the first half of 2013, he added. – (Bloomberg)
