Siemens sticks to outlook as orders defy crisis

Munich: German engineering group Siemens stuck to its financial targets for the 2008-09 business year as strong new orders from power customers helped it weather fallout from the global credit crunch.

Siemens said yesterday that unlike many of its rivals, it had not seen cancellations or delays in its projects. Solid demand from emerging markets had helped it pull in new orders.

Siemens - whose products range from turbines to light bulbs and hearing aids - said it is starting to benefit from a strategy shift away from volatile telecommunication activities towards non-cyclical segments such as health care.

Chief Executive Peter Loescher said: "We've done our homework. And here we progressed faster than expected. You have to fix the roof while the sun is shining."

Siemens reiterated that it still saw total sector profit - which measures earnings from its core industry, energy and health care divisions - at 8.0 billion euros to 8.5 billion euros for fiscal year 2009, though its outlook excludes the possible impact of restructuring as well as legal and regulatory matters.

Fourth-quarter profit at the core sectors fell 25 per cent to 1.485 billion euros.

It reiterated its 2009 forecast that group income growth from continuing operations would exceed the growth of total sector profit.

Siemens stock was up 0.07 per cent to 40.11 euros by 1056 GMT, while the German blue-chip DAX 30 index was down 1.1 per cent.

Analysts were keen to hear whether Siemens would keep its forecast after rivals such as General Electric, ABB and Philips last month made downbeat comments on the bleak business environment.

Siemens, whose share price has fallen around 60 per cent so far this year, trades at 7.2 times estimated 2009 earnings, at a discount to General Electric, ABB and Philips.

One-off costs

Siemens' net loss in the July-September quarter widened to 2.42 billion euros ($3.06 billion), weighed down by a record 3.9 billion euros in one-off costs mostly for restructuring and provisions for settling bribery investigations.

Analysts polled by Reuters had on average expected the net loss to widen to 1.854 billion euros from 74 million euros a year ago.

As expected, it booked one billion euros to cover looming fines to settle bribery investigations by the US Securities and Exchange Commission and German authorities.

Siemens is in the process of claiming damages from 11 former top managers - including former Chairman Heinrich von Pierer and ex-Chief Executive Klaus Kleinfeld - for failing to stop what it calls illegal practices and bribery at the company.

Von Pierer and Kleinfeld resigned last year. They have not been accused of crimes and both have denied any wrongdoing.

Loescher said Siemens was very pleased with its progress in settlement talks and that the company was "on the home stretch but haven't reached the finish line yet".

He declined to comment when asked by reporters whether he expected a deal would be reached by January.

Fourth-quarter new orders in the group's energy business rose 24 per cent to 7.246 billion euros while health care added 5 per cent to 3.382 billion. Orders at its industry sector - its traditional cash cow - were flat at 10.255 billion.