TODAY'S TOP STORIES
FONT-SIZE Plus   Neg
Share SHARE
mail  E-MAIL

Siemens Issues Profit Warning Over Customer Reluctance To Spend

Siemens Issues Profit Warning Over Customer Reluctance To Spend
RELATED NEWS
Trade SI now with 
7/26/2012 4:25 AM ET

German industrial conglomerate Siemens AG (SI: Quote) Thursday said the deteriorating environment has made it more difficult to achieve its full year earnings guidance, as its industrial short-cycle businesses continued to suffer from customer reluctance to spend. The company also had scrapped its initial public offering plan for the lighting unit Osram.

Peter Löscher, Chief Executive Officer of Siemens, said the deceleration of the world economy has increased in the past few months. Siemens' outlook was for 5.2 billion euros to 5.4 billion euros in income from continuing operations, excluding significant portfolio effects and impacts related to legal and regulatory matters in the fourth quarter. The firm expects moderate organic revenue growth in 2012.

Income from continuing operations in the just concluded third quarter increased to 1.229 billion euros from 763 million euros.

The debt crisis in Europe, which has been going on for months without a clear resolution, coupled with worries about cooling of growth in China, has made customers wary of the outlook for global economy. While peripheral nations like Greece and Spain were feeling the impact more severely, there is fear that the crisis could have a contagion effect.

Recently, Moody's Investors Service warned Germany, the Netherlands and Luxembourg that they might lose their coveted triple-A credit ratings due to intensified uncertainty regarding the outcome of the debt crisis.

Contrary to what Siemens said, Swiss peer ABB Ltd. said earlier today that although the macroeconomic view remains uncertain, it has seen positive developments in China. ...the continued strength of the US market and our resilience in Europe make us more confident about the short-term outlook than we were three months ago,'' ABB stated.

Siemens said today that it does not intend to complete its original plan to dispose of the lighting unit Osram via an initial public offering by year-end. The new plan for Osram includes a spin-off to Siemens shareholders.

Net income attributable to the company's shareholders increased to 823 million euros from 462 million euros in the prior year. Earnings per share advanced to 0.93 euros from 0.52 euros. The latest results included a negative noncash effect of 443 million euros related to Osram.

The prior-year results included profit impact related to divesting Siemens' stake in Areva NP and changing the focus of particle therapy projects.

Revenue climbed to 19.542 billion euros from 17.844 billion euros. Of the 10 percent growth in revenue, five percentage points came from favorable currency translation effects.

Orders declined 23 percent from last year to 17.770 billion euros. This included a 3.7 billion euros order for trains in Germany and a substantially higher volume from large orders in Energy.

Excluding currency translation and portfolio effects, revenue rose 3 percent and orders declined 27 percent.

All Sectors reported revenue growth in the third quarter, benefiting from currency translation effects.

The Americas as well as Asia and Australia saw double-digit revenue growth. The region comprising Europe, the Commonwealth of Independent States, Africa and the Middle East showed a moderate increase.

Emerging markets grew 8 percent and accounted for 6.329 billion euros or 32 percent of total revenue for the quarter.

The stock is currently falling 3.6 percent in Frankfurt at 64.89 euros.

Register
To receive FREE breaking news email alerts for Siemens AG and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.