Siemens speeds up cost savings to tackle downturn

The trains to industrial software maker cut its 2020 revenue guidance and said it expected the coming weeks to be the worst of the downturn.

However, it also announced plans to float its £1.75bn Flender mechanical drives business, as part of a strategy to make the group simpler and focus on factory and building automation.

The German engineering giant may still keep a stake in the business.

Siemens shares were up as investors were also reassured by an improvement at its flagship factory automation unit in the company’s fiscal second quarter.

The division’s profitability and orders rose in the three months to the end of March as customers stockpiled drives, controllers and monitoring systems used to automate factories.

Andreas Willi, analyst at J.P. Morgan, said: “These results for Siemens were always about getting through them without an operating disappointment, following the first quarter miss, proving some resilience, and confirming the energy spin off.

“Overall, Siemens delivered on what was needed.”

Chief executive Joe Kaeser said he thought the current quarter would be the worst of the crisis for Siemens, which reported a 64 per cent drop in shareholders’ net profit for its second quarter.

“We are reasonably confident we are going to see the trough in our fiscal third quarter, based on what we hear from our customers and what we see in the supply chain,” Mr Kaeser said.

He added: “The question is whether there will be some sequential relief in the fourth quarter or not.

“We are planning more for a two or three quarters trough before we see some substantial up-tick again.”

Siemens said it now expected a “moderate decline” in comparable full year revenue, a figure which chief financial officer Ralf Thomas said meant a drop of up to 5 per cent.

Siemens had previously guided for moderate sales growth in 2020.

China was seeing some signs of recovery, while the United States was probably at its lowest ebb, Mr Kaeser said. India, where 20 of Siemens factories were closed, was also difficult, he added.