BERLIN, May 9 (Xinhua) -- Windfall IT earnings have allowed the German industrial conglomerate Siemens to lift its annual profit forecast on Wednesday in spite of continued difficulties in the company's oil and gas division.
Having experienced a jump in the second quarter (Q2) net profits by 39 percent to 2 billion euros (2.38 billion U.S. dollars), Siemens now expects to record total net profit of between 6.5 and 6.8 billion euros in the course of the current year, compared to a previous estimate of between 6.1 and 6.5 billion euros.
The Munich-based company's unexpectedly-strong quarterly performance was mainly owing to the formal integration of a stake in Atos software company into the Siemens pensions fund on its balance sheet.
Nevertheless, Siemens chief financial officer (CFO) Ralf Thomas emphasized that ongoing woes in the oil and gas division justified widely-publicized plans to cut costs and reduce headcount. "The power and gas division, which is responsible for 15 percent of our revenue, is still operating in an extremely competitive market," a statement by Thomas read.
A lack of new demand for carbon-based power plants translated into falling revenue and orders in Q2 at the troubled unit, with profits collapsing by nearly three quarters. The company has recently reached an agreement with workers' representatives on the outlines of a restructuring plan which will eliminate thousands of international jobs in the unit.
By contrast, Siemens' business with engineering products related to digitalization continued to boom in Q2. Quarterly new orders and revenue both grew by around a fifth while profits soared by 40 percent. The company's railway division performed favorably as well in Q2 as it benefited from several international orders for high-speed trains.
Overall, Q2 revenue stagnated at around 20.1 billion euros compared to the same period last year and total new orders fell slightly by 2 percent to 22.3 billion euros. Siemens blamed the development on formidable currency headwinds to its business caused by the appreciation of the euro.
Commenting on news that the United States will withdraw from the Iran nuclear deal, Thomas said he could not yet predict the effect of the decision on his company's earnings. It was clear, however, that Siemens would "complete whatever we have begun (in Iran) as long as the legal framework allows us to do so." (1 euro=1.19 U.S. dollars)