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Germany's Siemens, bucking trend, sees moderate growth next year

Reuters  |  MUNICH 

By John Revill

MUNICH (Reuters) - bucked the trend of boardroom caution when it said on Thursday it expects to shrug off global geopolitical tensions and notch up "moderate" sales growth next year.

described the German engineering company's guidance as "courageous", saying it saw only limited risks and expected to increased sales in the 3 to 5 percent range during its 2019 fiscal year, which began on Oct. 1.

The outlook was for "moderate growth", he told TV after the company reported better-than-expected fourth-quarter earnings.

"The capital markets would likely interpret that as growth of between 3 and 5 percent," he said.

The train-to-turbine maker's shares rose 1.1 percent in early trading, bolstered by a new 3 billion euro ($3.43 billion) share buyback.

"If everybody is concerned, there has to be somebody who brings hope and shows people the way. This is not arrogant ... Our customers like what we do," Kaeser said.

Many companies have voiced worries about slowing growth as trade tension between the and mounts and economies in many countries ebb.

told an analysts' call however that had good visibililty for the first six months of its year, and had not seen any negative indicators stemming from geopolitical tensions hitting its smaller and shorter-term projects.

Despite the upbeat comments, investment research firm cut its rating on the shares to 'hold' from 'strong buy'.

"We think its outlook statement points to a tougher operating environment in FY19, on the back of rising macroeconomic uncertainties and geopolitical tension," said in a note.

Siemens' confidence contrasts with the troubles at its U.S. rival which last month slashed its dividend, said it faces a deepening and vowed to restructure its power unit.


Shares in Siemens' Swiss rival hit a nearly two-year low last month after the group reported third-quarter results. turned more cautious on its European outlook, citing concerns about and Britain.

tried to ease mounting concerns about and global demand last month after it affirmed its 2018 profit estimate, a move that investors feared signaled a cap in earnings growth and sparked a sell-off in its shares.

Kaeser, who is reorganising to simplify its structure and speed up growth, was particularly buoyed by the strength in Siemens' short-cycle businesses like its Digital Factory automation unit, the jewel in its crown.

During the three months ended Sept. 30, the division raised revenue by 10 percent and profit by 28 percent, helped by sales of its which controls industrial processes in factories.

Kaeser said he thought the could continue to grow even in uncertain times and take market share.

But the Power and Gas business remained a sore spot, swinging to a loss of 139 million euros during the quarter as the collapse in demand for persisted and it was hit by charges from cutting jobs.

The business, which competes with and Mitsubishi Heavy Industries, has also seen falling prices due to over-capacity in the sector.

In September, Siemens said it would cut around 2,900 jobs in to achieve 500 million euros in cost savings to improve the competitiveness of its Power and Gas division and the and Drives division.

The overhaul triggered 301 million euros in restructuring charges which weighed on the Siemens's industrial profit, which remained flat at 2.145 billion euros.

Siemens' results were also hit by a one-off tax charge related to the separation of its mobility unit. Siemens is seeking approvals from competition authorities to combine the train business with France's

As a result, net profit fell 46 percent to 681 million euros, better than the 595 million euros expected in a poll. [Z8N1UN00H]

Siemens proposed raising its dividend. Kaeser said its new share buyback would not prevent future acquisitions.

($1 = 0.8758 euros)

(Reporting by John Revill; Editing by Maria Sheahan and Adrian Croft)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, November 08 2018. 16:59 IST