Siemens will leave the Russian market due to the war in Ukraine, it said today, taking a 600 million euro impact on its business during the second quarter, with more costs to come.
The German industrial and technology group became the latest multinational to announce losses linked to its decision to leave Russia following the February 24 invasion, which Moscow calls a “special military operation.”
Various companies, from brewers Anheuser-Busch InBev and Carlsberg to sportswear maker Adidas, carmaker Renault and various banks have been counting the cost of suspending operations or withdrawing from Russia.
Siemens Chief Executive Roland Busch described the conflict as a “turning point in history”.
“We as a company have clearly and strongly condemned this war,” Busch told reporters.
“We are all shaken by war as human beings. And the financial figures must take a backseat to the tragedy. However, like many other companies, we are feeling the impact on our business,” he said.
During the second quarter, Siemens incurred €600 million in impairment and other charges booked primarily in its train-making mobility business following the sanctions on Russia.
Busch said more impacts were expected, mainly from non-cash charges related to the liquidation of legal entities, the revaluation of financial assets and restructuring costs.
“From today’s perspective, we see further potential risks to net income in the low to mid triple-digit million range, although we cannot define an exact time frame,” he added.
Siemens shares fell 5% in early trading as the company missed analysts’ expectations for second-quarter earnings.
The Munich company employs 3,000 people in Russia, where it has been active for 170 years. He first went to Russia in 1851 to deliver devices for the telegraph line between Moscow and Saint Petersburg.
The country now contributes about 1% of Siemens’ annual revenue, with most of the current business related to maintenance and service work on high-speed trains.
Its sites in Moscow and St. Petersburg are now downsizing, Busch said.
Costs weighed on Siemens’ second-quarter profit, with net income halved to 1.21 billion euros, below analysts’ forecasts of 1.73 billion.
The company recorded an industrial profit of 1,780 million euros, 13% less than the previous year and also failed to meet forecasts.
But demand remained strong, with orders 22% higher on a like-for-like basis and revenue 7% higher.
As a result, it confirmed its outlook for the full year, with comparable revenue growth of 6% to 8% for the full year, with the slowdown 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.”