Siemens will leave Russia because of the Ukrainian war, taking over the reins

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Siemens will leave Russia because of the Ukrainian war, taking over the reins

Siemens Chief Executive Roland Busch described the conflict as a “turning point in history.”

“We’re all moved by the war as human beings. And financial figures must take a back seat in the face of the tragedy. Nevertheless, like many other companies, we’re feeling the impact on our business.”

“From today’s perspective, we foresee further potential risks for net income in the low- to mid-triple-digit million range, although we can’t define an exact timeframe,” he added.

During the second quarter Siemens incurred 600 million euros in impairment and other charges mostly recorded in its train-making mobility business subsequent to sanctions on Russia, Siemens said.

Story Highlights

  • Several companies, from brewers Anheuser-Busch InBev and Carlsberg to sportswear maker Adidas, carmaker Renault and several banks have been counting the cost of suspending operations in or withdrawing from Russia.

  • “We, as a company, have clearly and strongly condemned this war,” Busch told reporters.

Siemens shares dropped 5% in early trading as the company missed analysts’ expectations for second- quarter profit.

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

The country now contributes about 1% of Siemens’ annual revenue, with most of the present day business concerned with maintenance and service work on high-speed trains. Its sites in Moscow and St Petersburg are now being ramped down, Busch said.

The costs weighed on Siemens’ second quarter earnings, with net income halved to 1.21 billion euros ($1.27 billion), missing analysts’ forecasts of 1.73 billion. The company posted industrial profit of 1.78 billion euros, down 13% from a year earlier and also missing forecasts.

But demand stayed robust, with orders 22% higher on a comparable basis and revenue 7% higher. As a result it confirmed its full-year outlook, with revenue comparable revenue growth of 6% to 8% for the full year, with a downturn in mobility expected to be compensated by faster growth in factory automation and digital buildings.

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