Siemens again demonstrates operating strength in second quarter
Total Sectors profit for fiscal 2010 expected to exceed prior-year level of roughly €7.5 billion
Munich, Germany, Siemens again showed outstanding profitability in the second quarter of fiscal 2010, increasing net income 48 percent year-over-year, to €1.5 billion. Total Sectors profit rose 16 percent to around €2.1 billion. Siemens subsequently raised its profit forecast and now expects Total Sectors profit to exceed the prior-year level of around €7.5 billion. “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,” said Peter Löscher, President and CEO of Siemens AG. “In times of crisis we very intentionally maintained our innovation power and are asserting our strength in the market. We expect Total Sectors profit above the prior-year level.”
Revenue trends stabilized in the second quarter. Due in part to the cushioning effect of strong order backlogs in a number of infrastructure businesses, revenue of €18.2 billion was down only 4 percent compared to the prior-year period. Revenue in all three Sectors grew compared to the previous quarter. While the Industry Sector saw signs of improving market conditions in its short-cycle businesses, some energy and industrial infrastructure businesses experienced further market contraction. Orders worth €17.8 billion were 14 percent below the prior-year period, which included a peak volume from major orders.
Total Sectors profit for the second quarter rose to €2.1 billion, on increases in all three Sectors. Energy’s profit growth came primarily from the Fossil Power Generation Division, which improved its business mix. The Healthcare Sector improved its mix as well and cut functional costs compared to the prior-year period. The Industry Sector demonstrated the success of measures taken to address the economic downturn, profiting from improving markets for its short-cycle businesses.
While market conditions for our shorter-cycle businesses have started to improve, we anticipate that conditions for our late-cycle businesses will remain challenging in the second half of the fiscal year. We continue to expect only a mid-single-digit percentage decline in organic revenue in fiscal 2010 due in part to the stabilizing effect of our strong order backlog. We expect Total Sectors profit for fiscal 2010 above the prior-year level of roughly €7.5 billion. This increase from our earlier guidance of €6.0 to €6.5 billion correspondingly raises our expectation for after-tax growth in income from continuing operations.
This outlook excludes major impacts that may arise from restructuring, portfolio transactions, impairments, and legal and regulatory matters.
Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. For over 160 years, Siemens has stood for technological excellence, innovation, quality, reliability and internationality. The company is the world’s largest provider of environmental technologies, generating €23 billion – nearly one-third of its total revenue – from green products and solutions. In fiscal 2009, which ended on September 30, 2009, revenue totaled €76.7 billion and net income €2.5 billion. At the end of September 2009, Siemens had around 405,000 employees worldwide. Further information is available on the Internet at: www.siemens.com.
This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words such as “expects,” “looks forward to,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “project” or words of similar meaning. Such statements are based on the current expectations and certain assumptions of Siemens’ management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect Siemens’ operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For Siemens, particular uncertainties arise, among others, from changes in general economic and business conditions (including margin developments in major business areas and recessionary trends); the possibility that customers may delay the conversion of booked orders into revenue or that prices will decline as a result of continued adverse market conditions to a greater extent than currently anticipated by Siemens’ management; developments in the financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued volatility and a further deterioration of the capital markets; a worsening in the conditions of the credit business and, in particular, additional uncertainties arising out of the subprime, financial market and liquidity crises; future financial performance of major industries that Siemens serves, including, without limitation, the Sectors Industry, Energy and Healthcare; the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; the introduction of competing products or technologies by other companies; a lack of acceptance of new products or services by customers targeted by Siemens; changes in business strategy; the outcome of pending investigations and legal proceedings and actions resulting from the findings of these investigations; the potential impact of such investigations and proceedings on Siemens’ ongoing business including its relationships with governments and other customers; the potential impact of such matters on Siemens’ financial statements; as well as various other factors. More detailed information about certain of the risk factors affecting Siemens is contained throughout this report and in Siemens’ other filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.
Reference Number: AXX20100457e
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