Siemens raised its full year profit guidance on Wednesday, citing a strong first half helped by a 900 million euro ($1.07 billion) gain from transferring its stake in IT services company Atos SE to its pension fund.
The German engineering group said it now expected full year earnings per share in the range of 7.70 euros to 8 euros per share ($9.13 to $9.48), up from its previous guidance of 7.20 euros to 7.70 euros. Siemens’ EPS for its 2017 business year was 7.44 euros or 7.09 euros on a comparable basis.
In the three months ended March 31, Siemens reported net profit of 2.02 billion euros, beating the forecast for 1.11 billion euros in a Reuters poll.
The net result included a gain of 900 million euros Siemens made from transferring the roughly 12 percent stake it held in French IT services company Atos to its pension fund.
Siemens confirmed the rest of its guidance, including expecting a profit margin of 11 to 12 percent for its industrial business which makes products ranging from trains to turbines. For the second quarter, the profit margin was 11.7 percent.
“Most of our business, primarily our digital offerings, showed impressive performance and operationally more than offset structural challenges in fossil power generation,” Siemens’ Chief Executive Officer Joe Kaeser said in a statement.
“By raising our guidance, we demonstrate our commitment to the company’s capability to master structural change and shape digital industry,” he added.
Earnings at Digital Factory, Siemens’ factory automation unit, increased by 40 percent, compensating for weakness in the power and gas business.
For the second quarter, Siemens said its industrial profit fell 8 percent to 2.254 billion euros, better than the 2.07 billion euros forecast.
Siemens has been hit by a further slump in demand at its power and gas business, which makes gas and steam turbines which use fossil fuels, where sales fell 28 percent. Orders also continued to decline, pointing to no improvement in the sector that has been hit by the increasing popularity of cheaper renewable energy.
Siemens has reached an agreement in principle with trade unions about its plans to cut jobs and restructure its struggling Power and Gas (PG) and Process Industries and Drives (PD) businesses in Germany, it said on Tuesday.
The company is also temporarily shutting down all of its Power & Gas sites around the world for one week to save money.