Siemens CEO Says Imaging, Surprising Chinese Market Driving Company Growth
Siemens CEO Joe Kaeser stated that he is surprised and “very pleased” with recent double-digit growth in Siemens’ healthcare division, citing specifically the company’s diagnostic imaging business and an unexpected rebound in its business with China. Moving into 2016, Kaeser said he expects momentum to be maintained, with diagnostics providing greatest potential for growth.
Siemens’ net profit rose 42 percent in the most recent quarter to $1.7 billion, rather than the $1.14 predicted by financial analysts, according to US News and World Report. Its healthcare division experienced an 11 percent increase in adjusted growth with a 16.5 percent profit margin.
According to Reuters, Siemens' unexpected bump across several divisions surprised the industry by outpacing competitors General Electric and Philips. Earnings per share in Siemens stock are now at the highest levels they’ve achieved in a year, and UBS analyst Fredric Stahl told Reuters that he expected Siemens to be one of the best performers this results season, “outperforming peers slightly.”
Overall, Kaeser said that the divisions performed as predicted and remained on track with Siemens’ Vision 2020 strategy, a plan that is expected to streamline the company and face a troubling macroeconomic and geopolitical landscape by focusing on innovation.
“We cannot make our customers buy more, but we can do more productivity in our company and innovate more,” Kaeser told CNBC, saying that Siemens’ numbers were strong despite concerns about instability in the market and corruption in China.
Kaeser stated he believed industry pessimism surrounding the Chinese markets was unfounded, adding that Siemens’ business in China was strong despite structural challenges, a point he reiterated in a recent earnings release. Siemens has seen a recent sharp rebound in healthcare revenue and orders coming out of China, said Kaeser, amidst exceptionally strong order growth across all regions.
“Generally, the market dynamics in China, as it comes to healthcare, are still intact,” as long as companies keep an eye on growing domestic competition, said Kaeser in an earnings call.
According to Kaeser, Siemens’ medical imaging products contributed most significantly to the record double-digit growth and he expects those numbers be consistent throughout 2016.
“It was an exceptional strength in the imaging environment, while diagnostics was a bit light, which actually even offers the potential moving forward,” said Kaeser.
In November, the FDA cleared Siemens computed tomography (CT) scanners for low-dose lung cancer screenings, which Siemens hailed as a milestone not only for the company, but for CT as an imaging modality. Siemens is also working with Dutch research scientists on a biopsy robot integrated with ultrasound and MRI imaging technology.
Siemens also divested itself of its hearing aid business, recently selling off its remaining stake to EQT Partners for $326 million.
Moving forward, Kaeser said Siemens would continue to focus on structural challenges within the company and pour more energy into strengthening market footholds and innovation power.
“Healthcare needs to step up its efforts to quickly resume to its outstanding performance,” said Kaeser in a press release.