Siemens Reports Profit But Outlook Downbeat

Siemens chief executive Heinrich von Pierer said results for the July-September period "will come in below the level of the third quarter," for which Siemens reported a 725 million-euro ($717 million) net profit. But in a telephone conference, he declined to specify how great the reduction would be.

The company's shares fell sharply on the news. By late afternoon, they were down 5.6 percent at 47.30 euros ($46.77) on the Frankfurt exchange, helping push the blue chip DAX index down 3.6 percent. Earlier, the stock had been down more than 9 percent. The company's U.S.-traded shares reversed early losses amid a broad rally on Wall Street and gained $3.15 to close at $52.65 on the New York Stock Exchange. That is down from a net profit of 1.61 billion euros in last year's third quarter, which was ballooned by one-time gains. Excluding the gains, Siemens had an effective loss of 705 million euros last year.

Siemens said the improvement in core earnings was driven partially by strong earnings in its power generation, medical solutions, and automation and drives units.

However, sales decreased by 4 percent from the year-earlier period to 20.48 billion euros ($20.26 billion), and overall orders plunged by 20 percent to 19.03 billion euros ($18.82 billion), the company said.

Munich-based Siemens last year launched a restructuring program including thousands of job cuts in a bid to reduce costs and ride out the downturn in the world economy.

Its chief financial officer, Hans-Joachim Neubuerger, said the company expects to take charges of 100 million euros ($98.9 million) or more in the fourth quarter as a result of restructuring at troubled fixed-line telecommunications unit IC Networks.

ICN lost 84 million euros ($83 million) in the third quarter, down from 158 million euros in the previous three months. Wireless telecoms unit IC Mobil, meanwhile, slipped to a loss of 9 million euros ($8.9 million) as a result of slow demand and price pressure, a figure that compared with a second-quarter profit of 44 million euros.

Pierer said he was "generally satisfied with our results for the third quarter and the fiscal year to date, given the ongoing difficult conditions in many of our markets."

But he said a one-time gain from the sale of Siemens' U.S. Internet routing business Unisphere, which Neubuerger put at 400 million euros ($396 million), wouldn't offset losses elsewhere in "the challenging fourth quarter and extremely difficult market conditions."

Siemens said nine-month net profit was 2.54 billion euros ($2.52 billion), including one-time gains that totaled 936 million euros ($926 million). Last year's figure was 3.19 billion euros, 2.54 billion euros of which was accounted for by special items.

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