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.

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