Bloomberg News

Siemens to Post Stable Profit and Revenue, Handelsblatt Says

January 22, 2013

Siemens AG (SIE), Europe’s largest engineering company, will report fiscal first-quarter profit and sales on a similar level to the previous year, Handelsblatt reported, without saying where it got the information.

Profit from continuing operations was probably about 1.3 billion euros ($1.7 billion) in the three months through December, the newspaper said. That compares with a 1.36 billion- euro profit in the same period last year. Revenue was stable at about 17.9 billion euros, the newspaper said. The average estimate of 15 analysts surveyed by Bloomberg is for sales of 18.2 billion euros.

The company will also report some charges for the solar business it is leaving and train delivery delays. Siemens spokesman Philipp Encz declined to comment. The Munich-based company is scheduled to report results tomorrow. The stock gained 0.3 percent to 84.73 euros as of 9:49 a.m. in Frankfurt.

Siemens is one of the first major industrial companies to report earnings for the final three months of 2012, offering an insight into global demand for its products, which span trains, power turbines, medical scanners and factory automation gear. Chief Executive Officer Peter Loescher has come under growing pressure to prove his strategic skills, after most deals that he supervised soured, and a push into environmentally-friendly energy generation led to spiraling costs.

Delayed Delivery

Profitability at Siemens last year dropped back to the levels when Loescher started in 2007. The CEO issued a new program to cut costs in November after acknowledging he’d been too slow to react to falling demand.

Costs relating to the delayed delivery of new ICE trains to Deutsche Bahn AG, the German national rail operator, will probably exceed 100 million euros, Handelsblatt said, citing estimates from unidentified people. Siemens’ departure from the solar energy business also hurt profit, the newspaper said.

“The 17.9 billion euros revenue seems slightly weak compared to consensus,” London-based Sanford Bernstein analyst Martin Prozesky, who rates Siemens market perform, said by phone. “There is a public spat between Deutsche Bahn and Siemens. They haven’t previously indicated that they would take a charge, but people won’t be surprised if it comes given the disputes.”

Deutsche Bahn said Nov. 22 it didn’t expect new ICE high- speed trains manufactured by Siemens to be operational before 2016, affecting planned routes to France and Belgium. It is seeking compensation for the delay.

Deteriorating Prices

The solar energy unit was put up for sale in October as part of a cost-cutting plan, two years after its founding through acquisitions including Archimede Solar Energy and Solel Solar Systems. Deteriorating prices for photovoltaic modules have made concentrated solar power less attractive, and the activities had been unprofitable since Siemens bundled the operations into a separate unit in 2011.

Siemens’ equipment joint venture with Nokia, called Nokia Siemens Networks, has already reported better-than-expected results for the last three months of 2012, posting an operating profit of 13 percent to 15 percent of sales excluding some items.

Siemens predicts revenue this year “approaching the level” of 2012’s 78.3 billion euros, Chief Financial Officer Joe Kaeser reiterated Jan. 14.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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