Siemens Q2 Profit Up, Confirms FY Outlook; Buys Rolls-Royce Energy Business

(RTTNews) - German conglomerate Siemens AG (SI) Wednesday reported a higher second-quarter profit, reflecting stable organic revenue supported by emerging markets. The result was also driven by rise in total Sectors profit. The company confirmed its outlook for full year 2014.

Siemens continues to expect markets to remain challenging in fiscal 2014, and that its short-cycle businesses are not anticipating a recovery until late in the fiscal year.

Siemens also announced a corporate overhaul, which will reorganize the company into nine divisions. According to the firm, the strategic realignment will enable it to focus on growth fields in electrification, automation and digitalization.

In addition, the firm announced purchase of major part of Rolls-Royce's energy business and contribution of Siemens' Metals Technologies into a joint venture.

Rolls-Royce Holdings plc (RR.L, RYCEY.PK) said it has agreed to sell its Energy gas turbine and compressor business to Siemens AG (SI) for 785 million pounds cash. The business being sold supplies aero-derivative gas turbines, compressor systems and related services to customers in the Oil and Gas and Power Generation sectors.

Separately, John Wood Group Plc. (WDGJF.PK, WG.L) confirmed that following satisfactory receipt of relevant regulatory approvals, its gas turbine services joint venture with Siemens, to be known as EthosEnergy, was established on Wednesday.

Announcing its preliminary results, the company said its second-quarter net income to shareholders increased to 1.12 billion euros or 1.32 euros per share from 1.01 billion euros or 1.18 euros per share in the prior year.

Earnings per share from continuing operations were 1.33 euros, up from 1.13 euros per share a year earlier.

Total Sectors profit for the second quarter climbed 16 percent year-over-year to 1.57 billion euros.

Orders declined 13 percent compared to the prior year period, mainly due to lower volume from large orders. On an organic basis, orders fell 10 percent to 18.43 billion euros.

Joe Kaeser, president and chief executive officer said, "The second quarter showed that we still have a lot to do to improve our operating performance. Nevertheless we are on course to reach our targets for the fiscal year."

During the quarter, the company recorded income from investments accounted for using the equity method, net of 195 million euros, up from 68 million euros a year ago.

Adjusted EBITDA totaled 2.01 billion euros, compared to 1.87 billion euros last year. Revenues for the quarter decreased 2 percent to 17.45 billion euros from 17.78 billion euros in the prior year. On an organic basis, excluding currency translation and portfolio effects, revenue was up 1 percent. Organic revenue growth in emerging markets was 7 percent.

For 2014, the company still expects basic earnings per share to grow by at least 15 percent from 5.08 euros in fiscal 2013 and organic revenue to be flat, while orders to exceed revenue, for a book-to-bill ratio above 1.

On Frankfurt's Xetra, Siemens shares are currently trading at 96.31 euros, up 2.56 percent.

On the NYSE, the shares closed Tuesday's trading at $130.68, down 0.14 percent.