By Ed Frankl
Siemens AG said Thursday that it would exit its Russia business after 170 years, dragging its second-quarter profit below expectations.
The German industrial company said second-quarter profit was affected by around 600 million euros ($630.9 million) due to impairments and other charges related to Russia, mainly at its mobility railway-technology segment.
Siemens in March put on hold all new business in Russia, which in 2021 generated around 1% of the company's revenue.
In comments to the media after second-quarter results, Chief Executive Roland Busch said that Siemens foresees further risks to net income in the "low- to mid-triple-digit million range" from consequences of the Russia exit, though he couldn't give an exact time frame.
The exit wouldn't affect the business activities of Siemens Healthineers AG, he said.
Siemens's net profit in the January-March period was affected as a result, declining on year to EUR1.21 billion from EUR2.39 billion a year earlier.
The net-profit figure was below expectations of EUR1.73 billion, according to analysts' estimates provided by the company.
The year-ago figure included a EUR900 million gain from the sale of Flender to The Carlyle Group.
However, revenue rose 16% to EUR17.04 billion, while orders jumped 32% to EUR20.98 billion after double-digit increases in all industrial businesses.
Both came in above consensus views of EUR16.79 billion and EUR19.10 billion, respectively.
The company said it avoided major disruptions from increased supply-chain risks associated with electronic components, raw materials and logistics.
"In an extremely challenging environment, our business continues to be strong," Mr. Busch said.
Siemens confirmed its outlook for fiscal 2022, including 6% to 8% growth in comparable revenue and a book-to-bill ratio above 1.
But recent Omicron coronavirus outbreaks and the lockdowns in the Chinese cities of Shanghai and Shenzhen pose a risk for the third quarter, Mr. Busch said.
"The now tangible results of our portfolio optimization and ongoing mitigation of supply chain challenges allow us to look confidently into the second half of our fiscal year," Chief Financial Officer Ralf P. Thomas said.
Write to Ed Frankl at email@example.com
(END) Dow Jones Newswires