Siemens profit hit by oil; CEO defends $7.6B deal
The CEO of Siemens has defended the company's decision to enter the U.S. shale oil space last year, as the group reported a 25 percent drop in net income in the first quarter of 2015.
Speaking to CNBC Europe's "Squawk Box" on Tuesday, Joe Kaeser, president and chief executive officer of Siemens, said the decline in oil prices did not worry him. The German electronics and engineering group acquired American oilfield equipment maker Dresser-Rand in a $7.6 billion deal in September.
"We are not in here for a quarter, we are not in for short-term aspects of the oil price, we do believe this is a good space to be because we can bring the expertise from automation and electrification into the oil and gas space so we feel very comfortable in what we see," Kaeser said.
His comments came as the company reported net income of 1.095 billion euros ($1.22 billion) in the first quarter, down from 1.457 billion euros in 2014, as its power and gas unit was hit by a weaker global economy and oil price. Profit at the unit fell 39 percent in the first three months of the year.
Shares of Siemens were 2.4 percent Tuesday morning.
But Kaeser told CNBC that he was optimistic that a lower oil price would provide additional opportunities.
"If the oil price is down that certainly will boost sentiment with lower gas prices at the pump so this will give a positive impact into the automotive industry," he said.
"We also believe that oil importing countries, such as emerging markets will massively benefit from a lower oil price bill and that will go into the infrastructure build-up in those countries. So we think there's a lot of opportunity coming from a lower oil price."
Siemens reported a 5 percent rise in first quarter revenue, to 17.4 billion euros ($19.5 billion)—slightly above analyst expectations in a Reuters poll.
"The performance of most of our businesses was within our expectations," Kaeser said in a statement. "While some divisions provided excellent performance, healthcare needs to step up its efforts to quickly resume to its outstanding performance and power and gas will need a more comprehensive concept to return to historical margins longer turn."
The company confirmed its outlook for 2015, but warned that geo-political tensions "among other things" would add to a "complex" business environment.
Kaeser also noted that there were "pockets of weakness" in China, but stressed that in the long-term, the country presented a "very attractive market to be in."
Siemens announced a major reshuffle of its board on Monday, appointing a new team to run its healthcare business. It also said the chief of its struggling power and gas unit would leave this week.
Follow us on Twitter: @CNBCWorld