German multinational conglomerate Siemens AG became the latest company to announce financial losses due to its decision to leave Russia after it invaded Ukraine earlier in February. Confirming the news Siemens CEO Roland Busch added the company strongly condemned the war.
Several companies, including beer maker ABI and apparel giant Adidas, have already announced that they would stop operating in Russia due to the country’s conflict.
Siemens reported a 600-million-euro loss during its second-quarter earnings due to its training division, which was largely affected by the sanctions against Russia. Additional factors that affected the company’s earnings include the re-evaluation of its financial assets and the winding-down of legal entities.
Although Siemens didn’t provide an exact timeframe for the impact of the war on its earnings, it noted that it could reach a triple-digit million range. Even the company’s stock price dropped 5% in early trading after reporting a lower-than-expected profit for the second quarter.
For those unaware, the German multinational conglomerate has been operating in Russia for over 170 years, and it employs around 3,000 people in the country. Siemens first started operations in the country back in 1851 to deliver telegraph equipment.
The company’s presence in Russia has managed to increase its revenue significantly. It now contributes about 1% of the company’s annual revenue, with most of its activities being related to the maintenance and services of high-speed trains.
Due to the ongoing Ukraine war and the sanctions against Russia, the company decided to scale back its operations in the country. In effect, Siemens’ net income fell to 1.21 billion euros during the second quarter, which was less than the company’s expectations.
The German company maintained its revenue growth although its profit was down 13% from a year earlier. Furthermore, the demand for its products remained strong and the growth will be driven by the increasing demand for digital buildings and factory automation.
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