Skip to main content

Siemens CFO Joe Kaeser: Q&A

Siemens CFO Joe Kaeser recently spoke with TheStreet's Debra Borchardt about order flow at the German industrial conglomerate.



) --Order flow at industrial conglomerate

Siemens AG

(SI) - Get Silvergate Capital Corp. Class A Report

provides valuable insight into estimating the pace of global economic recovery.

The German-based company receives 47% of its revenues from industrial infrastructure businesses and recently won an order worth up to 580 million euros to supply as many as 54 trains to the Russian Railway in relation to the 2014 Winter Olympics to be held in Sochi.

Siemens CFO Joe Kaeser

Argus analyst Jim Kelleher expects Siemens to see increased demand if the global economy improves later in 2010, even though orders currently remain depressed. Kelleher specifically cited potential upside for the company's power-related operations. "We think the energy business may begin to thrive with help from green initiatives, which range from solar thermal efforts to gas turbines," he wrote in a recent research note.

Siemens' Sold on Solar

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 67215557001; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

Siemens and

General Electric

(GE) - Get General Electric Company Report

have been competing fiercely in the wind power arena. Now, Siemens is making a big push into solar, as evidenced by its acquisition of Israeli solar thermal power products maker Solel Solar Systems in October for $418 million. The company sure to see plenty of competition for business in this area from stalwarts like GE and another U.S. industrial bellwether,

United Technologies

TheStreet Recommends

(UTX) - Get n.a. Report

, as well as the smaller solar equipment companies such as

Evergreen Solar



First Solar

(FSLR) - Get First Solar, Inc. Report

, and

GT Solar



I spoke to Siemens Chief Financial Officer Joe Kaeser recently about a number of topics, including the company's solar initiatives and also the effect of the global recession on its customers. This excerpted portion of the interview deals specifically with order flow with Kaeser saying the company is seeing signs of improvement in its healthcare and early-cycle industrial infrastructure businesses, while other areas continue to struggle. We have seen concern about some of the Eastern European countries struggling financially. Are you seeing any signs of recovery?

Siemens CFO Joe Kaeser

: Yes. First of all, they haven't been as bad as they have been made to look. There have been issues in the Eastern European countries because they've been growing too quickly. Now they are back to where they are able to handle infrastructure matters. Other emerging countries like China or the Middle East or India, they are very well prepared to face the next area of global business, so they are very valued economies and valued customers.

What is your outlook for 2010 for orders?


: It's very difficult to predict the economy right now so we want to be better relative to competition. That's our aspiration. That's what shareholders deserve. In terms of order intake we need to differentiate between the three sectors we are active in.



We've done a very decent job in our healthcare business. We've seen better growth in order intake and revenue than most of the competitors have. We've developed decent margins so we are overall satisfied with health care.



We have seen and have predicted a slide on order intake because the long-cycle industries have not seen the bottom yet. But, by the same token, we do rely and can rely on the very robust order backlog, especially in energy in the long-cycle environment. It's not only a robust backlog in terms of volume but also robust backlog in terms of profitability which can be executed out of it.

Industrial Infrastructure


The third and also the biggest area is the industrial infrastructure sector. And here we have to differentiate between the early-cycle businesses such as lighting or industrial automation and the more long-cycle businesses like industrial solutions or building technologies. The latter one has not seen the bottom and

it will take time to arrive there.

The early cycle environment, which is served by our Osram division, has actually seen encouraging developments on the market. So the worst is over there. And if we see surprises

in this area, it should be to the positive rather than to the negative.

Edited for clarity.


Written by Debra Borchardt in New York.