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Siemens swings to loss after write-downs and supply chain drag

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A cyclist exits the Siemens Energy AG gas turbine factory in Berlin, Germany. Photo: Liesa Johannssen-Koppitz/Bloomberg

A cyclist exits the Siemens Energy AG gas turbine factory in Berlin, Germany. Photo: Liesa Johannssen-Koppitz/Bloomberg

A cyclist exits the Siemens Energy AG gas turbine factory in Berlin, Germany. Photo: Liesa Johannssen-Koppitz/Bloomberg

Siemens AG recorded a loss following impairments as well as drag from ongoing component shortages and pandemic lockdowns in China.

Net income during the fiscal third quarter was a negative €1.7bn ($1.7bn), the company said Thursday. That missed analyst expectations of a €634m loss, according to data compiled by Bloomberg.

The German industrial giant said while it's faced with a complex economic environment marked by sanctions on Russia, high inflation and effects of the pandemic, the company has avoided "larger disruptions."

Siemens in June wrote down the value of its stake in Siemens Energy AG by €2.7bn following the turbine maker's repeated profit warnings. On Thursday, it doubled impairments related to its exit from Russia to €1.2bn.

Due to the charges, Siemens cut its expected increase of earnings per share to as much as €5.73, down from as much as €9.10. The company maintained its outlook for revenue growth.

The company, still in the process of revamping its business toward higher-margin, software-driven product lines, is facing higher costs due supply-chain problems, leading among them the chip shortages, and higher prices for raw materials. The company earlier this year also abandoned its operations in Russia, ending a 170-year presence and losing about €4bn in cancelled orders.

Siemens has sold off most of the smaller divisions destined for divestment and is shifting focus to areas with higher growth potential. In recent weeks, the company bought US software firm Brightly for $1.6bn, started a new digital business platform and bought a minority stake in Volkswagen AG's electric-car charging subsidiary Electrify America.

Orders at the digital industries unit surged 32pc, driven by factory-automation software and other labour-saving services, while profitability was held back by semiconductor shortages and higher expenses for cloud-based activities, Siemens said. Orders at the Smart infrastructure unit climbed by 26pc, although revenues in China declined due to coronavirus lockdowns. Both units are central to Siemens push into higher-margin software offerings.

Siemens' Mobility division, which makes trains, won orders of €2.8bn. Returns fell because of the exit from Russia.

Profit from industrial business rose to €2.9bn with returns of 17pc slightly below analyst expectations.

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