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Siemens Forecasts Growth Rate Will ‘Ease’ in the Second Half

Siemens AG Chief Financial Officer Joe Kaeser. Photographer: Ramin Talaie/Bloomberg
Siemens AG Chief Financial Officer Joe Kaeser. Photographer: Ramin Talaie/Bloomberg

April 5 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, anticipated growth will slow in the second half and said earnings in the quarter that just ended were burdened by a “disappointing” renewable energy division.

“We expect the growth rate to ease,” Chief Financial Officer Joe Kaeser said on a call with analysts today. Siemens, which reports under a fiscal year that ends on Sept. 30, 2011, fell as much as 2.9 percent in Frankfurt, the most in 20 days.

Kaeser said the renewable energy division had a “disappointing” performance, with “continued challenges” at the solar thermal unit. The company has taken “tangible” measures to improve the unit, and successfully managing a turnaround is a “matter of accountability,” the CFO said.

Siemens is extending efforts to raise profitability and plans to move some capacity and jobs at a unit making power-transmission gear to lower-cost locations, Kaeser said. Chief Executive Officer Peter Loescher is simplifying the company structure, with a plan to list lighting bulb division Osram this year and create a fourth division focusing on infrastructure.

Falling Stock

Siemens fell as much as 2.80 euros to 95.35 euros. The stock has gained 3.3 percent so far this year, valuing Siemens at about 87.5 billion euros ($123.9 billion).

The renewable-energy operations, which Siemens built through acquisitions, are a central component of Loescher’s strategy to push into clean-energy markets with windmills and solar-power systems. Siemens plans to add at least 2,000 jobs at the renewable-energy division this year to meet rising demand, unit head Rene Umlauft said in an interview in January.

The maker of trains, turbines and health-care scanners is sticking to stringent rules on making acquisitions, although an exception is possible, Kaeser said. Some deals conducted this year in the industry have been “richly valued,” he said.

“Every day you read the newspapers, there’s another big deal on the front page,” Kaeser said. While Siemens has excess cash to make large-scale acquisitions, the company will remain “diligent” with its efficiency targets, the executive said. Siemens cash holding stood at 15.66 billion euros as of Dec. 31.

Higher Sales

Kaeser predicted “significantly” higher sales in the fiscal second quarter that ended in March, as new orders increased by more than 10 percent. The company also said net income from continued operations rose above the prior-year period. The company will book some “adverse” one-time costs in the second quarter tied to some projects, Kaeser said.

Siemens, the manufacturer of Germany’s high-speed InterCity Express trains, has won orders in the current fiscal year to supply rolling stock or control systems to subway operators in Bangkok, Kuala Lumpur and Warsaw as well as the Amtrak railway network in the U.S.

German business confidence in March remained close to a February record, suggesting Japan’s earthquake and higher borrowing costs may not damp growth in Europe’s largest economy.

Kaeser said an improvement at the renewable-energy division is a “must-have,” while the building-technologies business shows promise to improve its margin.

“I am surprised by the hefty share price reaction as it is fairly obvious that comparison with last year will be tougher in the third and fourth quarter,” Commerzbank analyst Ingo-Martin Schachel said. “With the situation in Japan adding to uncertainty, the outlook is somewhat vague, but Siemens businesses continue to run very well in many areas.”

To contact the reporters on this story: Benedikt Kammel in Berlin at; Richard Weiss in Frankfurt at

To contact the editor responsible for this story: Benedikt Kammel at

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