Siemens CEO fears knock-on effects of oil price fall

FRANKFURT, March 19 (Reuters) – German industrial group Siemens is worried that the slump in oil prices is discouraging oil-exporting countries from investing in infrastructure, Chief Executive Joe Kaeser said on Thursday.

“That’s something we are seeing already. It’s not cancellation but it’s pushing out orders and the bid activity has become quite… slow,” Kaeser told investors at a Bank of America Merrill Lynch conference in London. Reuters monitored the conference via webcast.

Siemens shares dropped 2.6 percent to 102.60 euros by 1006 GMT, and were the leading decliners in a flat German blue-chip DAX index.

Siemens has about 8 percent direct exposure to the oil and gas sector, Kaeser said, which will increase to 11 percent when it closes its $7.6 billion agreed acquisition of U.S. oilfield equipment maker Dresser-Rand.

“I’m not as concerned about those 8 percent as about the so-called secondary effects,” Kaeser said, citing Russia, OPEC and central Asia countries as showing tendencies to cut spending as their oil exports fall in value.

Dresser-Rand announced a major restructuring last month as its customers slashed spending on oil exploration equipment in response to the plunging oil price.

Lower energy prices, including gas in many markets, have also hurt Siemens’ sales of large gas turbines as decentralised power generation at smaller plants is increasingly favoured.

Slides prepared for the conference showed Siemens expects a moderate decline in organic revenue this quarter driven by power generation and power distribution.