Earnings

Siemens posts profit beat but strikes gloomy tone

Key Points
  • The German conglomerate warned of an expected weakening in the global economy over the next 12 months and projected a slowdown for its short-cycle automotive and machinery products.
We're creating three 'very focused' market leading companies, Siemens CEO says
VIDEO3:5903:59
We're creating three 'very focused' market leading companies, Siemens CEO says

Siemens on Thursday posted industrial operating profit of 2.64 billion euros ($2.92 billion) for its fourth quarter, beating analyst expectations of 2.33 billion euros.

The figure represents a 20% rise in the three months to the end of September on the back of a substantial increase in large orders.

However, the German conglomerate offered a cautious tone for 2020, warning of an expected weakening in the global economy over the next 12 months and projecting a slowdown for its short-cycle automotive and machinery products.

"The weakening of the global economy accelerated clearly during fiscal 2019. Nevertheless, we were again able to underscore Siemens' performance aspiration with a brilliant fourth quarter," Siemens CEO Joe Kaeser said in the earnings report.

"We fully achieved our fiscal-year guidance in all aspects! Our Vision 2020+ strategic concept is beginning to get traction."

Revenue for the company's fourth quarter came in at 24.5 billion euros, an 8% increase year-on-year, while orders rose 4% to 24.7 billion euros.

We're creating three 'very focused' market leading companies, Siemens CEO says
VIDEO3:5903:59
We're creating three 'very focused' market leading companies, Siemens CEO says

Speaking to CNBC's "Squawk Box Europe" Thursday morning, Kaeser said political leadership was "going backwards" by shifting trade and economic policy towards nationalization and protectionism, but suggested that international powerhouses like Siemens were "one notch above territorial boundaries."

"We can allocate resources at any given point in time, so I am rather optimistic that exactly those companies who are so widely localized will actually be the ones who can get over these geopolitical matters."

Despite the prospect of the U.S. pulling out of the Paris Climate Accord, Kaeser said his customers stateside, from oil and gas and automotive companies to hospitals, were all concerned about reducing emissions.

"As much as I welcome and admire activities from young people, children at times, that really shake up society, that really take charge of their own future, this is only a diagnostics matter," he said.

"If you only have diagnostics, you are not going to get healthy, we need to have the cure. You need to have somebody who takes actions to bring down emissions and that is exactly what we do."

Kaeser added that the company is expecting in the next fiscal year to declare success on its target set four years ago for a 50% reduction in emissions by 2020, and suggested Siemens may bring forward its target of reaching CO2 neutrality by 2030.