Bloomberg News

Siemens Sets Lowest Profit Bar for New Infrastructure Division

December 01, 2011

Nov. 30 (Bloomberg) -- Siemens AG assigned the lowest profitability goal among its four main business areas to the newly created infrastructure division and said it still aims to publicly list its lighting unit sometime in 2012.

Earnings before interest and taxes, depreciation and amortization will reach 8 percent to 12 percent of sales at the infrastructure and cities unit, the German engineering company said in its annual report published today. Siemens also lifted the goal for its industry division to as much as 17 percent after shifting some lower-margin businesses to the new area.

Chief Executive Officer Peter Loescher is bundling offerings from metro trains to energy distribution in an effort to generate more revenue with municipal clients and help move closer toward a goal of 100 billion euros ($134 billion) in sales. Global markets served by the new unit will “grow modestly” in fiscal 2012 and pick up in 2013, Siemens said.

Profitability targets remained unchanged at 10 percent to 15 percent for the energy businesses, and at 15 percent to 20 percent for health care, Siemens said. Health-care markets will “expand moderately” in the coming two years, Siemens said.

Growth of markets served by the energy businesses will slow to a mid-single-digit percentage rate in fiscal 2012 and 2013, on “limited” growth potential for fossil power generation equipment and a “modest” development of onshore wind-farms. Growth will also slow in industrial markets, Siemens said.

Europe’s largest engineering company reiterated a forecast for “moderate” sales growth and net income from continuing operations of about 6 billion euros for the fiscal year that started Oct. 1. Sales will also grow the following year, Siemens said.

Siemens aims for an initial public offering of its Osram lighting unit in fiscal 2012, and plans to generate a return on capital employed of between 15 percent and 20 percent in both fiscal 2012 and 2013, the company said. The company had postponed an IPO of Osram slated for the latter part of this year, citing the swings in capital markets.

Loescher received total compensation of 8.65 million euros for fiscal 2011, 4 percent less than the year before, as the company made changes to the financial metrics that form the basis for executive pay.

--Editor: Benedikt Kammel

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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