Siemens leaves Russia due to war in Ukraine and takes over

  • Siemens leaves Russia after 170 years
  • Russia accounts for around 1% of total revenue
  • Stocks fall after profit loss
  • CEO condemns war in Ukraine

ZURICH, May 12 (Reuters) – Siemens (SIEGn.DE) will exit the Russian market due to the war in Ukraine, it said on Thursday, taking a 600 million euro ($630 million) hit ) to its activity in the second quarter, with more charges to come.

The German industrial and technology group has become the latest multinational to announce losses linked to its decision to leave Russia after the February 24 invasion, which Moscow describes as a “special military operation”.

Several companies, from brewers Anheuser-Busch InBev (ABI.BR) and Carlsberg to sportswear maker Adidas (ADSGn.DE), automaker Renault and several banks have counted the cost of suspending or withdrawing operations in Russia. Read more

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Siemens chief executive Roland Busch described the dispute as a “turning point in history”.

“As a company, we have clearly and strongly condemned this war,” Busch told reporters.

“We are all affected by war as human beings. And the financial numbers must take a back seat to the tragedy. Nevertheless, like many other companies, we are feeling the impact on our business.”

During the second quarter, Siemens incurred 600 million euros in impairments and other charges primarily recorded in its rail mobility business as a result of sanctions against Russia, Siemens said.

Busch said other impacts are to be expected, primarily non-cash charges related to the liquidation of legal entities, revaluation of financial assets and restructuring costs.

“Looking ahead today, we expect further potential risks to net profit in the triple-digit million range, although we cannot define an exact time frame,” he added.

Shares of Siemens fell 5% in early trading as the company missed analysts’ expectations for second-quarter earnings.

The Munich company employs 3,000 people in Russia, where it has been active for 170 years. He first traveled to Russia in 1851 to deliver apparatus for the telegraph line between Moscow and St. Petersburg.

The country now contributes around 1% of Siemens’ annual turnover, with most of the current business going to maintenance and servicing work on high-speed trains.

Its locations in Moscow and St. Petersburg are being scaled down, Busch said.

Costs weighed on Siemens’ second-quarter earnings, with net profit halving to 1.21 billion euros ($1.27 billion), missing analysts’ forecast of 1.73 billion.

The company posted industrial profit of 1.78 billion euros, down 13% from a year earlier and also missed forecasts.

But demand remained strong, with orders up 22% like-for-like and sales up 7%.

As a result, it confirmed its full year outlook of 6% to 8% comparable store sales growth for the full year, with a slowdown in mobility expected to be offset by faster growth factory automation and digital buildings.

JP Morgan analyst Andreas Willi described the results as “mixed with strong orders, industry-leading automation growth and strong cash conversion.”

($1 = 0.9508 euros)

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Reporting by John Revill; Editing by Kim Coghill and Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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