Siemens Gives More Optimistic Outlook as Profit Beats Estimate
Peter Loescher, president and chief executive officer of Siemens AG, speaks at a news conference in New Delhi. Photographer: Pankaj Nangia/Bloomberg
Siemens AG, Europe’s largest engineering company, said profit rose 40 percent as job cuts and cost savings combined with a rebound in demand for factory automation gear, health-care products and light bulbs.
Sector profit, or operating income at Siemens’s energy, health-care and industry divisions, was 2.33 billion euros ($3.03 billion) in the quarter ended June 30, compared with 1.67 billion euros a year earlier, the Munich-based company said today in a statement. Analysts in a Bloomberg survey estimated 2.14 billion euros. Orders rose 22 percent to 20.87 billion euros, compared with the survey’s 19.1 billion-euro prediction.
Net income rose 12 percent to 1.41 billion euros, the company said.
Siemens is scheduled to bring an end to a program that placed as many as 19,000 workers on shorter shifts as factories grappled with lower demand during the financial crisis. Germany’s VDMA machine makers’ association, which had predicted stagnant output this year, switched to a growth forecast of 3 percent on July 20 following a surge in May.
The German maker of trains, turbines and body scanners has advanced about 20 percent this year in Frankfurt trading, for a market value of more than 70 billion euros. That compares with General Electric Co.’s 6.9 percent gain.
Spurred by growth in emerging markets and a recovery in short-cycle businesses such as light bulbs, Siemens raised its outlook for full-year earnings on April 29. By contrast, delays to power-plant projects and big-ticket investment programs are hampering orders for turbines. Sales this year will decline in a mid-single-digit percentage range, Siemens has said.
Siemens cut about 16,000 jobs in the 15 months though March and Chief Executive Officer Peter Loescher is in the process of cutting 4,900 jobs, or 15 percent of employees, at its industry solutions division by 2011.
Both GE and Alstom SA, the world’s third-largest power- equipment maker, have suffered from fewer orders among customers in the power industry. Royal Philips Electronics NV, the world’s biggest lighting company, forecast sales growth will slow in the second half.
To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net.
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