Amid ongoing restructuring and layoffs at Siemens, healthcare leads
Healthcare was one of the strongest segments at German conglomerate Siemens last quarter, both in terms of sales growth and profitability. That could help insulate this business, comprised mostly of imaging and diagnostics, from an ongoing restructuring that aims to trim employees and costs from its worst performing businesses. Siemens' massive empire spans energy, transportation, healthcare and technology.
Siemens has previously stated that it will spin off its healthcare business, which is already separately managed. It also started consolidating divisions and businesses at the beginning of last October. Since then, the company said it had identified €1 billion ($1.1 billion) in potential savings from overhead and administration costs. It said it had already acted to execute on those.
|Siemens CEO Joe Kaeser|
Additionally, it plans a review of "underperforming businesses not making a decent profit," Siemens President and CEO Joe Kaeser said on the recent earnings call.
It's selling its healthcare IT and water businesses as well as partnered its metals business. It's working to turn around its postal and baggage handling businesses. Some transportation units were also identified as underperforming. These accounted for roughly €21 billion ($23 billion) in 2013 revenue.
Last quarter, Siemens had €3.2 billion ($3.5 billion) in healthcare revenue, an increase of 5% from the same period a year ago. On the whole, the conglomerate had €18.8 billion ($20 billion) in continuing operation sales last quarter--that was a decline of 3%.
Healthcare was also Siemens' most profitable business last quarter, bringing in more than one-third of its €1.6 billion in profits from continuing operations. In healthcare, orders were up 4% last quarter, with double-digit growth in the Americas but weakness in Asia, particularly in China.
"Diagnostics and imaging showed an excellent profitability development which as expected, was also supported by currency tailwinds. Healthcare is progressing like planned to further optimize its business, operationally as well as strategically," said Kaeser on the call.
Kaeser said he still sees more opportunities in the Chinese market, but noted that the declines were mainly in new imaging equipment.
And on its relative strength in the U.S. in healthcare last quarter, Kaeser cautioned that he wouldn't call that state a new normal. Instead he underscored that a very competitive market in which, "you win through innovation, and you win through proximity to your customers."
- here is the release (PDF)
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