Siemens leaves Russia because of the Ukraine war, accepts heavy charges

Siemens leaves Russia because of the Ukraine war, accepts heavy charges

  • Siemens leaves Russia after 170 years
  • Russia accounts for about 1% of total sales
  • Stocks fall after a loss of earnings
  • CEO condemns war in Ukraine

ZURICH, May 12 (Reuters) – Siemens (SIEGn.DE) will exit the Russian market due to the war in Ukraine, the company announced on Thursday, posting a 600 million euro ($630 million) loss in the second quarter ) come into purchase additional costs.

The German industrial and technology giant was the latest multinational to announce losses linked to its decision to leave Russia after the February 24 invasion, which Moscow describes as a “military special operation”.

Several companies, from breweries Anheuser-Busch InBev (ABI.BR) and Carlsberg to sporting goods manufacturer Adidas (ADSGn.DE), carmaker Renault and several banks have calculated the cost of hiring or withdrawing from Russia. Continue reading

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

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

“War moves us all as human beings. And the financial numbers have to take a back seat in the face of the tragedy. However, like many other companies, we are feeling the impact on our business.”

Siemens suffered 600 million euros in impairments and other charges in the second quarter, mostly recorded at its mobility business that manufactures trains, as a result of sanctions against Russia, Siemens said.

Busch said further impact is expected, primarily from non-cash charges related to the dissolution of legal entities, revaluation of financial assets and restructuring costs.

“From today’s perspective, we see further potential net income risks in the low to mid three-digit million range, although we cannot define an exact time frame,” he added.

Siemens shares fell 5% in early trade as the company missed analysts’ expectations for second-quarter earnings.

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

The country now accounts for about 1% of Siemens’ annual sales, with the bulk of today’s business being maintenance and service work on high-speed trains.

The Moscow and St. Petersburg sites are now being shut down, Busch said.

The costs weighed on Siemens’ second-quarter earnings, with net income halving to 1.21 billion euros ($1.27 billion) and missing analysts’ forecasts of 1.73 billion.

The company posted industrial profit of 1.78 billion euros, down 13% year-on-year and also missed forecasts.

However, demand remained resilient, with orders up 22% on a like-for-like basis and sales up 7%.

As a result, the company reiterated its full-year guidance with full-year revenue-comparable revenue growth of 6% to 8%, with a decline in mobility expected to be offset 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.”

($1=0.9508 euros)

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Reporting by John Revill; Edited by Kim Coghill and Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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