Siemens to leave Russia because of the Ukraine war, take on a huge responsibility

ZURICH (Reuters) – Siemens (SIEGn.DE) said on Thursday it was pulling out of the Russian market over the war in Ukraine, taking 600 million euros ($630 million) in damages from its business during the second quarter, with more costs to come.

The German industrial and technology group has become the latest multinational company to announce losses linked to its decision to leave Russia following the February 24 invasion, which Moscow described as a “special military operation”.

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Siemens CEO Roland Bosch described the conflict as a “turning point in history”.

“We as a company clearly and strongly condemn this war,” Bush told reporters.

“We have all been affected by war as human beings. Financial figures must step back in the face of tragedy. However, like many other businesses, we feel the impact on our business.”

Siemens said that during the second quarter, Siemens incurred losses of 600 million euros and other fees, which were mostly recorded in the rail industry’s transportation business after sanctions against Russia.

Bush said further impacts are expected, particularly from non-cash fees related to liquidation of legal entities, revaluation of financial assets and restructuring costs.

“From today’s perspective, we anticipate further potential risks to net income in the low-to-mid-triple million range, although we can’t pinpoint an exact timeframe,” 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 operating for 170 years. I went to Russia for the first time in 1851 to deliver devices for the telegraph line between Moscow and St. Petersburg.

The country now contributes about 1% of Siemens’ annual revenue, with most of the current business concerned with maintenance and service work on high-speed trains.

Bush said its locations in Moscow and St. Petersburg are now being scaled back.

Costs weighed on Siemens’ earnings in the second quarter, with net income halving to 1.21 billion euros ($1.27 billion), missing analysts’ expectations of 1.73 billion.

The company generated industrial profit of 1.78 billion euros, down 13% from the previous year and also below expectations.

But demand remained strong, with orders up 22% on a comparable basis and revenue increasing 7%.

As a result, it confirmed its full-year forecast, with comparable revenue growth of 6% to 8% for the full year, with the decline in mobility expected to be offset by faster growth in factory automation and digital buildings.

Andreas Wylie, an analyst at JPMorgan, described the results as “mixed with strong demand, industry-leading growth in automation and strong cash conversion.”

(1 dollar = 0.9508 euros)

Report by John Revell; Editing by Kim Coogle and Clarence Fernandez

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