3rd UPDATE: Siemens Lowers Fiscal Year 09 View But Shares Soar
30 April 2009 - 1:00AM
Dow Jones News
Siemens AG (SI) Wednesday lowered its profit forecast for the
current fiscal year as the economic crisis continued to take its
toll.
The move wasn't a surprise - analysts had already marked down
their forecasts to below the management's previous target and
shares soared despite the lowered guidance.
The German industrial conglomerate said it now expects operating
profit from it core business in the fiscal year ending Sept. 30 to
exceed last year's EUR6.6 billion, against analysts' forecasts for
EUR6.9 billion. The previous forecast, given nine months ago,
targeted an operating profit of EUR8 billion to EUR8.5 billion.
Siemens expects a weaker performance even in its energy sector,
the primary profit growth driver in the March quarter. It also
anticipates a worsening environment in its healthcare market and
expects short-cycle businesses in its energy sector, its Osram
lighting sector and to a greater extent in its industry sector to
remain weak in coming quarters.
Chief executive Peter Loescher said that there is no indication
that the global economy has seen the bottom yet.
Operating profit at Siemens' core sectors of energy, industry
and healthcare in the quarter ended March 31 was up 43% to EUR1.84
billion. Net profit surged to EUR962 million from EUR384 million a
year earlier after the previous figure was hit by charges totaling
EUR857 million for delays in turnkey projects.
Order intake in the second quarter was EUR20.86 billion, down
11% on the year, but sales grew 5% to EUR18.96 billion due to
strong order intake in recent quarters. As of March 31, Siemens
order backlog stood at EUR87 billion.
Siemens posted solid second quarter results, said UniCredit
analysts. The lowered forecast could even support the share price
as it removes the risk of further downgrades, UniCredit said.
By 1415 GMT, Siemens shares were up 6.5% at EUR50.69,
outperforming a 1.6% rise in the German DAX.
UniCredit rates Siemens at buy with a EUR66 target price.
Comparison of the second quarter results, though, is made more
complex because 12 months ago Siemens booked charges for delays in
major turnkey projects that it had invoiced on a fixed-price
basis.
As a result, operating profit in the energy sector surged to
EUR818 million from EUR6 million a year ago. Still, sales in the
segment grew 28% to EUR6.36 billion.
In contrast with U.S. peer General Electric Co. (GE) Siemens
said it had no major cancellations, but did have some project
postponements, Chief Financial Officer Joe Kaeser said.
Siemens' healthcare sector increased operating profit 4% to
EUR355 million with sales grew to 10% to EUR2.98 billion.
Netherlands-based Royal Philips Electronics NV (PHIA.AE), which
also competes in the healthcare segment, earlier this month posted
a bigger-than-expected first quarter net loss partly due to its
healthcare business.
However, Siemens' industry sector sales were down 4% to EUR8.65
billion while operating profit decreased 29% to EUR671 million.
This unit counts auto makers as key customers, many of whom,
including Germany's BMW AG (BMW.XE), have felt the brunt of the
economic downturn.
Kaeser said he expects the short cycle business of its industry
sector to recover in the second half of fiscal 2010. He said he
expects new order growth rates in the energy sector to decline
while its healthcare sector is expected to be stable for the
purposes of Siemens' internal planning.
Company Web site: www.siemens.com
-By Archibald Preuschat, Dow Jones Newswires, +49 211 138 7218,
archibald.preuschat@dowjones.com