German industrial conglomerate Siemens AG (SI) cut its profit forecast for the year, amid weak industry demand environment, and said it sees a moderate decline in organic revenue. The company's second-quarter profit and orders increased, while revenue dropped, it said in a statement Thursday.
Peter Löscher, CEO of Siemens AG, said, "Results for the second quarter show a mixed picture. While we were able to clearly increase orders, we still have challenges regarding revenue and profit. Even more we're focusing on the factors that lie in our own hands: we're rigorously executing our company-wide Siemens 2014 program."
Siemens expects income from continuing operations in 2013 to approach the low end of its original expectation, of 4.5 billion euros. The outlook excludes impacts related to legal and regulatory matters and significant portfolio effects that are estimated to burden income by up to 0.5 billion euros due primarily to the solar business.
The company expects a moderate decline in revenue on an organic basis compared to the prior year. Siemens confirmed its expectations of moderate organic order growth.
The previous forecast was for income from continuing operations in the range of 4.5 billion euros to 5.0 billion euros, including charges of about 1.0 billion euros for program-related productivity measures in the sectors.
Net income attributable to shareholders of the company for the second quarter climbed to 1.01 billion euros ($1.33 billion) from 904 million euros in the previous year. The latest results included a positive contribution from discontinued operations.
Siemens took a 161 million euros charge in the Infrastructure & Cities business in the just concluded related to high-speed rail projects.
Income from continuing operations rose to 982 million euros from 979 million euros a year ago, amid lower taxes. The prior-year period included an equity investment loss of 640 million euros related to Nokia Siemens Networks.
Revenues fell 7 percent to 18.01 billion euros from last year's 19.30 billion euros. According to the company, weaker investment sentiment in recent quarters was evident in second-quarter revenue, which declined in all sectors and reporting regions.
Orders climbed 20 percent to 21.45 billion euros, due mainly to large orders won in Europe. Siemens' order backlog increased to 101 billion euros at the end of the quarter
Total sectors' profit declined 29 percent to 1.374 billion euros due primarily to lower profit in Industry and Infrastructure & Cities.
On a regional basis, revenue declined significantly in the Americas and moderately in the region consisting of Europe, the Commonwealth of Independent States, Africa and the Middle East and in the Asia, Australia region. Emerging markets, on a global basis, declined 4 percent year-over-year.
The stock is falling 1.5 percent in early morning trade in Frankfurt at 78.05 euros.
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