Siemens shows robust second-quarter revenue and profit growth
Berlin, Germany, Siemens AG expects, even in the current global recession, that its Total Sectors profit for fiscal 2009 will exceed the prior-year level of €6.6 billion. In the second quarter, Total Sectors profit rose 43% from the prior-year level, to €1.844 billion, led by broad-based profit growth in the Energy Sector. Total Sectors profit thus totaled €3.876 billion for the first six months. In the second quarter, revenue rose 5% to €18.955 billion, driven by growth in the Energy and Healthcare Sectors. While orders of €20.864 billion came in 11% below the prior-year quarter, the book-to-bill ratio remained above 1. The order backlog of the three Sectors again increased, to €87 billion, and included no material cancellations during the quarter.
“In view of the deepening crisis in the world economy, we are satisfied with our results in the second quarter. We did particularly well compared to our competitors,” commented Peter Löscher, President and CEO of Siemens AG. “The Energy and Healthcare Sectors continued their strong run. In the Industry Sector, short-cycle businesses were again clearly weaker. We introduced measures to safeguard profitability early on. We’ve already made a strong impact with the SG&A reduction program. Additional measures, such as our supply chain initiative, have been set in motion. Therefore we go forward with the expectation of exceeding Total Sectors profit of the prior fiscal year,” said Löscher.
Order intake remained above revenue in second quarter
The book-to-bill ratio remained above 1 for the second quarter. While Healthcare Sector orders rose due mainly to positive currency translation effects, Industry and Energy saw reduced order intake in most Divisions. Overall, orders of €20.864 billion in the second quarter were 11% below the prior-year quarter. Global macroeconomic conditions remained challenging in the second quarter: Consumer spending and capital expenditures declined, and the business climate worsened. This was particularly evident in such short-cycle industries as automotive, manufacturing and lighting. Longer-cycle energy and infrastructure customers postponed potential new business.
Revenue in the second quarter rose to €18.955 billion, up 5% from a year earlier. The Energy and Healthcare Sectors delivered double-digit growth. This more than offset a 4% decrease at Industry driven by a drastic slump in short-cycle businesses. On a geographic basis, Siemens showed particular strength in the Americas and the region comprising Europe, the Commonwealth of Independent States, Africa and the Middle East.
Total Sectors profit grows – driven by Energy and Healthcare
Total Sectors profit for the second quarter climbed to €1.844 billion, up 43% from €1.288 billion a year earlier. Total Sectors profit in the second quarter of fiscal 2008 included charges of €768 million stemming from project reviews in the Fossil Power Generation Division and former Transportation Systems Group.
The Energy Sector was again the primary driver of Total Sectors profit, with all Divisions generating increases year-over-year. Healthcare also increased its Sector profit despite challenging market conditions. Sector profit declined significantly at Industry primarily due to volume-driven margin pressure.
Income from continuing operations for the second quarter was €955 million, up 69% compared to the second quarter a year earlier. Basic EPS on a continuing basis rose to €1.05 from €0.59 in the prior-year period. Net income was €1.013 billion, up from €412 million in the second quarter of fiscal 2008. Basic EPS climbed to €1.11 from €0.42 in the prior-year period.
Total Sectors profit should exceed prior year’s level
The current macroeconomic and financing environment shows no evidence of near-term improvement. Despite these conditions, Total Sectors profit for fiscal 2009 is expected to exceed the prior-year level of €6.6 billion. Siemens anticipates that growth in income from continuing operations in fiscal 2009 will exceed growth in Total Sectors profit. This outlook excludes portfolio effects and impacts from legal and regulatory matters. For fiscal 2009 Siemens targeted revenue growth at least twice the rate of actual global GDP growth. If GDP growth is negative, this means that a percentage decline in revenue for Siemens would be targeted at less than half the rate of decline in global GDP.
Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. The company has around 430,000 employees (in continuing operations) working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of solutions for individual requirements. For over 160 years, Siemens has stood for technical achievements, innovation, quality, reliability and internationality. In fiscal 2008, Siemens had revenue of €77.3 billion and a net income of €5.9 billion (IFRS). Further information is available on the Internet at: www.siemens.com.
Starting today at 9.00 a.m. CEST, we will provide a live video webcast of the press conference with CEO Peter Löscher, CFO Joe Kaeser and Barbara Kux, Member of the Managing Board. You can access the webcast at www.siemens.com/pressconference. The accompanying slide presentation can also be viewed here, and a recording of the conference will subsequently be made available as well. Also today at 4.00 p.m. CEST, you can follow a conference in English with analysts and investors live on the Internet by going to www.siemens.com/analystconference.
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 our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect our 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 us, 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 will delay conversion of booked orders into revenue or that our pricing power will be diminished by continued adverse market developments, to a greater extent than we currently expect; the behavior of financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued volatility and further deterioration of the capital markets; the commercial credit environment and, in particular, additional uncertainties arising out of the subprime, financial market and liquidity crises; future financial performance of major industries that we serve, including, without limitation, the Sectors Industry, Energy and Healthcare; the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; introduction of competing products or technologies by other companies; 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, including corruption investigations to which we are currently subject and actions resulting from the findings of these investigations; the potential impact of such investigations and proceedings on our ongoing business including our relationships with governments and other customers; the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about certain of these factors is contained throughout this report and in our 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.
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