Siemens reported weaker-than-expected industrial profit during its first quarter, the German industrial group said on Wednesday, adding it still expected to complete its mega rail merger with France’s Alstom in the first half of this year.
Siemens reported a 6 percent fall in adjusted operating profit for its industrial business during the three months ended Dec. 31 to 2.07 billion euros ($2.37 billion), missing the forecast for 2.15 billion euros in a Reuters poll as profits at its power business plunged.
Its Power and Gas business, which has been hit by collapsing demand for giant turbines as the global energy industry shifts toward renewable sources like wind and solar and away from fossil fuel power plants, suffered a 50 percent drop in operating profits during the quarter.
Efforts by Alstom and Siemens to create a European rail champion could yet hit the buffers despite their latest concessions to try to address antitrust concerns.
The merger aims to create the world’s second largest rail company — with combined revenues of about 15 billion euros ($17.1 billion) — but the deal has met opposition since it was announced in September 2017 .
On Wednesday Siemens, which has made further concessions to win approval, said it expects to close the deal in the first half of calendar year 2019.
During its fiscal first quarter, Siemens posted a 1 percent rise in group revenue to 20.12 billion euros, falling short of forecasts for 20.32 billion euros. Orders rose 12 percent to 25.17 billion euros, beating expectations.
The company maintained its guidance, expecting moderate revenue growth in 2019 when currency swings and acquisitions were removed. It said it also expected a profit margin of 11 to 12 percent from its industrial business.
It still expects basic EPS from net income in the range of 6.30 to 7.00 euros, excluding severance charges.