Lower than estimated income, dip in margins and impairment loss on account of closure of wind turbine plant dragged Siemens to Rs 55 crore loss in September end quarter against Rs 178 crore profit in same period last year. The full year profit of the Indian arm of German MNC fell over 50 percent to Rs 343 crore (Siemens follows October-September financial year).
Siemens posted a revenue of Rs 3375 crore for the September end quarter lower than analyst estimates and six per cent lower for the same period last year. The energy sector which contributes about 40-45 percent of the company's revenue was under performer making up for Rs 195 crore loss as against Rs 135 crore profit last year.
The poor results are a reflection of prevailing economic sentiment and the company said the business was impacted due to project deferrals and high operating costs. Siemens' peers including ABB and Alstom T&D too have been facing the pinch. While ABB reported 4 percent fall in profit and 33 percent less orders, Alstom T&D reported a modest Rs one crore loss in September end quarter.
Siemens managing director Armin Bruck said “Our overall results reflect the slowdown in the Indian economy. Higher project costs and unbooked profits due to customers delaying offtake partly affected the company’s profitability. The performance is below our own expectations. An improvement in the economy aided by quicker government approvals for infrastructure projects in sectors such as power and railways would positively impact our outlook.”
The company also announced it is reviewing its wind energy business in India and will not use its Vadodara plant for manufacturing wind turbines. " Wind energy solutions will be developed on a case-to-case basis for the Indian market by leveraging existing global Siemens AG manufacturing capacities. Hence, an exceptional item for an impairment estimated at Rs. 120 crores was booked in the quarter,'' the company said in the press statement. The company has decided to use its Vadodara plant for alternate purposes, it said.
"The results are disappointing. Excluding the Rs 120 crore impairment loss the company would have made a profit of about Rs 65 crore,'' an analyst said.
Last year Siemens had developed a new wind turbine suitable for power generation in low wind conditions. Siemens was looking to produce these turbines at its Vadodara plant from 2013 with an annual capacity of 250 MW and planning to ramp it up to upto 500 MW by 2015 to meet market demand. The Company is additionally investing in a research and development (R&D) technology center at Vadodara, the company had announced last year.
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