German engineering giant Siemens has reported a rise in its second-quarter profit by €130 million in what it says is a result of the promising prospects of future activities in Iran.
Siemens has officially revised upwards its valuation of its backlog of orders from Iran and says the resurgent business prospects in Iran after the removal of international sanctions has already increased its expectations of second-quarter revenues by €174 million, as well.
“This is a one-off effect due to the resurgence of business expectations,” Chief Financial Officer Ralf Thomas told reporters on a conference call. “The backlog can be worked through because the sanctions have been lifted,” Thomas has been quoted as saying by Reuters.
The revaluation partially reverses a 2012 writedown of the value of its Iranian business after restrictions were tightened, causing a hit of €347 million euros to its profit.
Munich-based Siemens maintained an office in Tehran throughout sanctions regimes imposed by the United Nations, United States and European Union.
Having reluctantly stopped all new business in Iran in 2010, it has been quick to seize opportunities since sanctions were eased in January and was the first major German company to agree a deal with Iran this year, Reuters added.
Siemens signed memoranda of understanding in March on rail infrastructure and gas equipment projects potentially worth billions of euros, as well as an energy agreement with Iranian power and infrastructure group MAPNA.
Chief Executive Joe Kaeser, who said in February Siemens wanted to pick up in Iran where it had left off, cautioned that the impact of new business there would not be material either this year or next.
“We’ll take time, we’ll talk to customers to see what is possible and what is not, and then we’ll take it from there. So we are very calm about it, we see the opportunity and we support our customers and then see what the outcome will be,” he has been quoted as saying by Reuters.
But Iran’s pent-up need for oil and gas equipment, transport infrastructure and healthcare equipment speak to many of Siemens’ strengths, and its long history in the country means it still has a foothold despite the emergence of strong competitors, mainly from China, during the sanctions, Reuters added.