Electronics and electrical engineering company Siemens AG (SI) reported Thursday a loss for the fourth quarter, as it took a hefty impairment on its stake in Nokia Siemens Networks B.V. However, the loss was narrower than the prior-year quarter, despite an organic revenue decline of 7%. Looking ahead, the company expects mid-single-digit percentage decline in organic revenue in fiscal 2010 and also cautioned that the overall market environment will remain challenging in 2010.
The Munich, Germany-based company's net loss for the fourth quarter attributable to shareholders narrowed to EUR 1.13 billion or EUR 1.31 per share from EUR 2.46 billion or EUR 2.85 per share in the previous year.
Loss from continuing operations was EUR 982 million or EUR 1.21 per share, compared to a loss of EUR 1.26 billion or EUR 1.51 per share a year ago.
During the quarter, the company had after-tax loss from discontinued operations of EUR 81 million or EUR 0.10 per share, compared to a loss of EUR 1.16 billion or EUR 1.34 per share in the year earlier. The prior-year quarter discontinued operations include a negative EUR 1 billion associated with the sale of a 51% stake of Siemens Enterprise Communications.
The company operates in three sectors: Industry, Energy and Healthcare. Total sectors profit in the fourth quarter increased to EUR 1.923 billion from EUR 1.533 billion a year earlier, on sharply higher profits in the Energy and Healthcare Sectors. Sectors profit is earnings before financing interest, certain pension costs and income taxes.
The increase in sectors profit was more than offset by other charges. The fourth quarter this year included a loss of EUR 1.98 billion in the Equity Investments segment, as Siemens took an impairment of EUR 1.634 billion on its stake in Nokia Siemens Networks and also recorded a quarterly loss of EUR 328 million due to the NSN stake. Further, Corporate items included EUR 169 million in net severance charges.
The prior-year quarter included, among other items, EUR 1.081 billion in net severance charges associated with the global SG&A reduction program and a pretax provision of about EUR 1 billion for subsequent settlements of legal and regulatory matters.
Total Group revenues for the fourth quarter declined 9% to EUR 19.71 billion from EUR 21.65 billion in the prior year. On an organic basis, excluding currency translation and portfolio effects, revenue declined 7%. According to Siemens, Industry Sector was the primary factor in lower revenue year-over-year, reporting a 13% decline in the fourth quarter.
Sector-wise, Industry revenues for the fourth quarter decreased to EUR 8.98 billion from EUR 10.28 billion a year ago. Energy sector generated revenues of EUR 6.76 billion, compared to EUR 6.75 billion last year. Healthcare revenues were EUR 3.14 billion, up from EUR 3.12 billion in the same quarter last year.
Siemens IT Solutions and Services generated revenues of EUR 1.16 billion, compared to EUR 1.46 billion in the prior year. Siemens Financial Services revenues increased to EUR 210 million from EUR 192 million in the previous year. Other Operations revenues decreased to EUR 107 million from EUR 680 million last year.
For the fourth quarter, Siemens Real Estate generated revenues of EUR 468 million, up from EUR 440 million in the preceding year. Corporate items and pensions revenue decreased to EUR 55 million from EUR 65 million in the comparable quarter a year ago.
Cost of goods sold and services rendered were EUR 14.59 billion, down from EUR 16.7 billion in the same quarter last year. Research and development expenses slightly decreased to EUR 1.02 billion from EUR 1.1 billion in the comparable quarter a year ago. Marketing, selling and general administrative expenses were EUR 2.92 billion, compared to EUR 4.09 billion in the preceding year.
The company noted that fourth-quarter orders came in 16% below the same period a year earlier at EUR 18.75 billion. On an organic basis, excluding currency translation and portfolio effects, orders came in 14% lower than last year. Orders came in lower for all Sectors compared to the prior-year period, Siemens said.
For the preceding third quarter, the company had reported a net income of EUR 1.32 billion or EUR 1.45 per share, down from EUR 1.42 billion or EUR 1.55 per share in the prior-year quarter. The company had reported third-quarter revenues of EUR 18.35 billion, down from EUR 19.18 billion last year.
For the full year, the company posted net income attributable to shareholders of EUR 2.29 billion or EUR 2.63 per share, compared to a net income of EUR 5.72 billion or EUR 6.39 per share in the prior year. Income from continuing operations increased to EUR 2.46 billion or EUR 2.58 per share from EUR 1.86 billion or EUR 1.9 per share in the previous year. Revenues for the year decreased to EUR 76.65 billion from EUR 77.33 billion a year ago.
Looking ahead, Siemens expects mid-single-digit percentage decline in organic revenue in fiscal 2010 due to the stabilizing effect of strong order backlog. The company projects total Sectors profit between EUR 6 billion and EUR 6.5 billion in fiscal 2010, and an increase of about 20% in income from continuing operations compared to EUR 2.46 billion in the previous year. The company added that this outlook excludes major impacts that may arise during the fiscal year from restructuring, portfolio transactions, impairments, and legal and regulatory matters. Peter Löscher, president and chief executive officer said, "In a very difficult environment, Siemens has performed very well in 2009 compared to its key competitors. Supported by our Energy and Healthcare Sectors, we can look back with pride on our stable revenue development and our robust profit on a operational basis."
"With new energy we started in fiscal 2010 and have strengthened our portfolio by the addition of Solel. We see substantial further potential worldwide in the area of environmental technology. To ensure the sustainable viability of businesses that have been particularly affected by the crisis we are continuing to rigorously implement all necessary measures. The overall market environment will remain challenging in 2010," added Löscher.
SI closed Wednesday's regular trading at $101.67, up $0.07 or 0.07%, on a volume of 470 thousand shares. In the past 52 weeks, the shares have been trading in a range of $47.53-$103.08 on the NYSE.
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