Home
 
Choose Your City
Change City

Siemens shareholders tell CEO to maintain momentum

By Georgina Prodhan

MUNICH, Germany (Reuters) - Siemens shareholders urged Chief Executive Joe Kaeser to press ahead with transforming the engineering group which made its best annual operating profit to date last year and raised its earnings forecasts.

As unknown risks loom from the protectionist policies of new U.S. President Donald Trump, Kaeser cautioned that the German company could not afford to be complacent, while basking in a rare glow of shareholder approval at the group's annual meeting as the company's shares jumped to a 17-year high on Wednesday.

"I admit we don't always succeed in everything. And risks lurk everywhere. But we have noticeably improved," Kaeser said.

Siemens raised its earnings forecasts on Tuesday after its industrial business profit jumped in its fiscal first quarter, lifted by its factory automation unit.

Asked about the risks and opportunities arising from Trump's election, Kaeser sounded clearly more concerned than three months ago when he had urged people to "give Trump a chance".

"The new American president has a style that's different from what we're accustomed to," he told a news conference ahead of the AGM. "It worries us, what we see."

Kaeser has made multi-billion-dollar bets on oil and gas, wind power and industrial software while shedding the last of Siemens' consumer businesses since taking over as CEO of Europe's top engineering group in 2013.

Many of these, especially oil and gas, depend on the United States, Siemens' biggest single market where it makes 21 percent of its revenue and employs 50,000 people.

The former finance chief now plans to list Siemens' healthcare operations.

POWER CEMENTED

The chief executive has cemented the power he won in a boardroom coup, seeing off veteran managers such as Siegfried Russwurm -- who gave a hard stare from the stage as Kaeser wished "Siggi" all the best for the future.

In the latest change, Chairman Gerhard Cromme announced he planned to hand over next year to 51-year-old former SAP co-CEO Jim Hagemann Snabe after a decade in office, marking a move to a more software-oriented era.

Kaeser has also banished, at least for now, the huge one-off charges for poor project risk management that plagued Siemens in the past - helping it reach a record operating profit of 8.74 billion euros ($9.43 billion) in its last fiscal year.

"We want the last, strong financial year not to remain an exception but to represent the new normal at Siemens. The old Siemens disease must never break out again," fund manager Ingo Speich of Union Investment, the 12th-largest shareholder in Siemens, told the AGM in Munich.

Speich praised the share-price performance of Siemens, which has risen by a third over the past year, outperforming the German blue-chip DAX as well as rival General Electric - whose shares rose just 5 percent in the same period - although lagging Rockwell Automation's 60 percent leap.

Siemens shares jumped a further 4.9 percent to a 17-year high of 122 euros on Wednesday after the trains-to-turbines group raised its profit forecast.

Siemens' raised profit outlook is still seen by some analysts as conservative, but executives warned that political uncertainty was working against many of its businesses, especially those requiring large, long-term investments.

"Price pressure is intense," Chief Financial Officer Ralf Thomas told journalists of the Power and Gas business, whose orders dropped 40 percent last quarter. "We have to fight for every order."

(Reporting by Georgina Prodhan; Editing by Keith Weir)

 

Have Your SayLeave a comment

Consider AlsoFurther Articles