China not as bad as people think: Siemens CEO

Siemens raises full-year guidance on profits
Siemens raises full-year guidance on profits

China's economic problems are not as bad as they appear in spite of the current market tailspin, the chief executive of German industrial giant Siemens told CNBC.

"The real economy in China is a lot better than people are talking about right now. There is obviously some weakness in terms of real estate and the finance sector but as far as our business is concerned, we do see some decent growth in healthcare, which was very, very strong with double-digit growth in China," Joe Kaeser, chief executive of Siemens, told CNBC on Tuesday.

Kaeser was speaking to CNBC after attending the World Economic Forum in Davos last week. While the meeting in the Swiss Alps had included a lot of "doom" about China, Kaeser said such pessimism was unfounded – particularly as Siemens' had seen a positive trend in the country.

Siemens had recovered "a lot" of market share in China and had seen good activity in the power generation and energy management field, Kaeser said, adding: "So we're actually pretty happy with what we're seeing in China relative to what their structural challenges are."

Siemens CEO Joe Kaeser
Michael Dalder | Reuters

On Monday, Europe's biggest industrial group reported first-quarter industrial profit, revenue and orders that beat market expectations and also raised its full-year earnings per share (EPS) forecast. The earnings come amid a cost-cutting drive at the company, an initiative that Kaeser said put the company in good stead.

"Obviously we got off to a very good start for our fiscal 2016 after a quite strong quarter in fiscal Q4 2015, so we can clearly see that, despite some macro-economic and geopolitical headwinds, our recent… actions and programs are in full place so we can take a lot of confidence out of that performance to be able to raise the forecast for the full-year 2016."

There has been speculation that markets could see Siemens float its robust healthcare division, which is already managed as a separate company as of mid-2015, this year. Kaeser said "time would tell" what happened to the business but did not rule out an initial public offering.

"Our decision to make healthcare a company in the company, to make it much more focused and stronger, has already been paying off. So what we actually want to do is to make a good business into a great business," he said.

"We are strong, we are winning market share and…we are very well-prepared for anything which we believe needs to be done to make this business and even greater business for Siemens."

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