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April 29, 2010, 10:18 a.m. EDT

Siemens Lifts Outlook as Net Profit Jumps

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By Archibald Preuschat

MUNICH—Siemens /zigman2/quotes/200873563/delayed DE:SIE -3.55% AG on Thursday posted a 54% rise in fiscal second-quarter net profit as restructuring measures boosted margins, and raised its profit guidance for the year.

Net profit for the three months to March 31 rose to €1.48 billion ($1.95 billion) from €962 million a year earlier.

Its closely watched operating profit at the core businesses of energy, industry and health care climbed 16% to €2.14 billion, as cost-cutting measures took effect. The figure was also buoyed by a €180 million gain on the curtailment of pension plans in the U.S.

The higher operating profit came even as sales fell 4% to €18.23 billion from €18.96 billion, and order intake declined 14% to €17.84 billion. Siemens said it booked two major contracts totaling €1 billion in the same period a year earlier and that some major projects in the energy sector have been postponed. Its book-to-bill ratio was 0.98, it said.

"Siemens has again demonstrated its profitability impressively. In this regard we are profiting in particular from measures we initiated early on to strengthen our competitiveness," Chief Executive Officer Peter Löscher said in a statement.

As expected, Siemens raised its full-year forecast for operating profit in its core sectors, saying it now expects to exceed last year's figure of €7.5 billion, up from previous guidance of a range between €6 billion and €6.5 billion. The company kept its outlook for full-year revenue to fall by a mid-single-digit percentage.

Chief Financial Officer Joe Kaeser said he expects Siemens to book restructuring charges of about €1 billion in the fourth quarter.

Siemens is a barometer for the world's manufacturing industry, with 402,000 employees in 190 countries and products that span hospital equipment, transportation, factory automation gear and power turbines. Like rivals General Electric /zigman2/quotes/208495069/composite GE +1.49% Co. and Netherlands-based Philips Electronics /zigman2/quotes/204604645/delayed NL:PHIA -0.73% NV, it has suffered from the slump in demand brought about by the downturn.

In 2008, Siemens began cost-cutting measures to strip €2 billion from its selling, general and administrative expenses and axed 12,600 jobs.

Siemens said that its businesses most affected by economic swings, such as lighting unit Osram, had started to improve earlier than planned and it expects health-care reform in the U.S. to have a positive impact, but late-cycle business such as major energy plants are expected to remain challenging into the second half of the year.

Referring to the Greece sovereign debt crisis, Mr. Löscher said he sees Siemens "in a very, very good position. We supply to 190 countries, hence turbulence in single countries has no significant impact."

Write to Archibald Preuschat at archibald.preuschat@dowjones.com

/zigman2/quotes/200873563/delayed
DE : Germany: Frankfurt
81.50
-3.00 -3.55%
Volume: 8,249
April 8, 2020 3:19p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€219,884
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/zigman2/quotes/208495069/composite
US : U.S.: NYSE
$ 7.14
+0.11 +1.49%
Volume: 1.16M
April 8, 2020 9:39a
P/E Ratio
95.39
Dividend Yield
0.57%
Market Cap
$61.45 billion
Rev. per Employee
$429,735
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/zigman2/quotes/204604645/delayed
NL : Netherlands: Euronext Amsterdam
36.23
-0.27 -0.73%
Volume: 1.22M
April 8, 2020 3:23p
P/E Ratio
28.33
Dividend Yield
2.35%
Market Cap
€32.51 billion
Rev. per Employee
€234,121
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