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Jan. 24 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, almost doubled the profit generated by its financial services unit, giving a boost to orders as it lured customers struggling to secure funding for equipment.
Pretax profit from Siemens Financial Services jumped 95 percent to 199 million euros ($260 million) in the quarter ended Dec. 31., the Munich-based company said today. Return on equity for the unit rose to 35.7 percent, surpassing a goal of 15 percent to 20 percent.
Tighter availability of credit means more customers are looking to expand using project loans with Siemens, Chief Financial Officer Joe Kaeser said today. That’s made the financial services arm a bright spot among divisions that include light bulbs, gas turbines, high-speed trains and medical scanners. Profitability in the quarter fell at all of Siemens four main businesses.
“We feel the effect in singular cases,” Siemens Chief Executive Officer Peter Loescher told journalists at a quarterly earnings briefing today, referring to the rise in financial services.
Assets at Siemens Financial Services swelled 10 percent to 16.13 billion euros. Profit was helped by the sale of part of a stake in Bangalore International Airport Ltd.
Siemens said on Sept. 29 its financing arm aims to double business in the next five years and mop up extra clients as banks cut lending to fend off Europe’s debt crisis. The unit provides credit for projects such as power plants and hospitals, and has been one of the German engineering company’s most profitable businesses for years.
Assets could exceed 20 billion euros by 2016 compared with 12.5 billion euros in 2010, unit head Roland Chalons-Browne said in September.
--Editors: Andrew Noel, David Risser
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