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Siemens says industrial environment has deteriorated, hitting profit

Siemens says industrial environment has deteriorated, hitting profit
FILE PHOTO: The Siemens logo is seen on a building in Siemensstadt in Berlin, Germany, October 31, 2018. REUTERS/Hannibal Hanschke -
Hannibal Hanschke(Reuters)
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By John Revill

MUNICH, Germany (Reuters) – Siemens <SIEGn.DE> on Thursday became the latest industrial company to warn about a weaker environment hitting its business after its flagship automation unit contributed to a 6% fall in profit during its third quarter.

Chief Executive Joe Kaeser said the trains to turbines maker had seen conditions become much weaker in its key markets but the company nonetheless confirmed its full-year guidance.

“As indicated already quite some time ago, geopolitics and geoeconomics are harming an otherwise positive investment sentiment,” he said in a statement.

Shares in Siemens were down 1.7% in early Frankfurt trade.

Siemens’ Swiss peer ABB <ABBN.S> last week warned of a slowdown in China, with lower orders. German luxury carmaker Daimler <DAIGn.DE> has also revised down its forecast for Mercedes-Benz car sales.

During its third quarter Munich-based Siemens reported net profit of 1.14 billion euros (£1.04 billion), down from 1.21 billion euros a year earlier. It missed analyst expectations for 1.18 billion euros in a poll compiled by the company.

Orders rose 8% to a better-than-expected 24.51 billion euros, while revenue increased 4% to 21.28 billion euros, matching forecasts.

Operating profit in Siemens’ industrial business fell 12% as digital industries struggled with falling demand for factory automation and motion control systems.

Nonetheless, Siemens said it continued to anticipate that orders would exceed revenue for a book-to-bill ratio above 1, meaning it gets more orders than it executes.

It expects the adjusted margin on earnings before interest, taxes, depreciation and amortisation (EBITDA) for its industrial businesses to reach the lower half of the 11.0% to 12.0% range, excluding severance charges.

It also confirmed its expectation that it will achieve basic earnings per share from net income in the range of 6.30 to 7.00 euros excluding severance charges.

(Reporting by John Revill; Editing by Michelle Martin)

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