--Siemens has set up a crisis team to tackle any supply chain issues caused by the coronavirus epidemic
--The German industrial company said it hadn't faced any purchasing problems so far
--Siemens's first-quarter earnings were hit by weak industrial demand and restructuring costs
By Ruth Bender
BERLIN--Siemens AG has set up a crisis team to ensure it can continue to operate through the coronavirus epidemic in China, complicating life for the German industrial giant as it grapples with industrial slowdown and restructuring its energy business.
Chief Executive Joe Kaeser said the team was set up as soon as the virus started spreading and was checking potential bottlenecks in the company's supply chain. So far, the group hadn't encountered any problems purchasing components. The crisis team was to "make sure it stayed that way," Mr. Kaeser said.
Siemens move comes as companies operating in China have been closing stores and factories are considering extended closures, potentially causing major disruption for global businesses relying on Chinese sites to make their products.
"At a time when no one yet knows how to beat the virus we need to stay calm and observe closely how things continue," Mr. Kaeser told reporters. The group's medical equipment subsidiary Siemens Healthineers shipped some ultrasound and CT scanning machines to Wuhan to assist doctors there.
The virus outbreak in one of Siemens' largest markets--worth roughly 10% of the group's total sales--comes as the company struggles with slowing demand from clients in the automotive and machine building sectors. At the same time, Siemens is implementing one of the most dramatic overhauls in its history with a planned spin-off of a new energy company later this year.
Earnings before interest, taxes and amortization from the company's closely watched industrial business fell 30% to 1.43 billion euros ($1.58 billion) in the three months ended Dec. 31, missing analyst expectations of EUR1.88 billion according to a company-compiled consensus. Profit was hit by lower revenue in the car and machinery sectors as well as high costs linked to ongoing restructuring.
Siemens kept its full-year goals, despite the risk the virus could accelerate a yearlong slump in the car and machinery market. Mr. Kaeser said easing tensions in the U.S.-China trade conflict might compensate for any disruption caused by the virus.
Mr. Kaeser acknowledged that Siemens had a lot to deal with, including an attack from climate activists for Siemens's involvement in an Australian coal mine that has put Mr. Kaeser on defense in recent weeks.
"There's a lot coming together," Mr. Kaeser said as climate activists staged protests outside the company's shareholder meeting.
This year will see Siemens take the most dramatic step yet in its effort to streamline its conglomerate structure and give individual business units more decision-making power and potential participation in market consolidation.
The company plans to list Siemens Energy in September, combining its gas-and-power business and the group's stake in wind turbine maker Siemens Gamesa Renewable Energy, which it boosted to 67% by acquiring Iberdrola 8% stake on Tuesday.
After the energy spinoff, Siemens will focus on digitalization and automatization, connecting factories and urban infrastructure to the internet.
Another milestone for Siemens this year will be a decision on who will succeed Mr. Kaeser as CEO when his contract expires in early 2021.
In October last year Siemens promoted Chief Operating Officer Roland Busch to deputy CEO, setting him up as a potential contender for the top job. A person close to the board said Mr. Busch, who is in charge of overseeing the turnaround, now has time to prove himself. Siemens' supervisory board will decide on succession this summer.
Write to Ruth Bender at Ruth.Bender@wsj.com
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