Monday March 17, 10:40 AM
Siemens issues surprise profit warning
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BERLIN (AFP) - German industrial giant Siemens (Xetra: 723610 - news) issued a surprise profit warning on Monday, saying earnings would be cut by about 900 million euros (1.4 billion dollars) following a review of major projects.
Shares in the company shed 13.66 percent to 69.16 euros in morning trades on the Frankfurt stock exchange, while the Dax index (Xetra: news) of leading shares plunged by 3.95 percent overall amid a global stockmarket rout.
Simens said a weaker-than-expected performance in projects at its energy division, which builds power plants and its transport unit, along with a lost British contract for information technology services meant a hit to earnings in the three months to March.
The group did not reiterate targets for the fiscal year that ends on September 30, nor did it issue new ones, but said that "the commitment to the targets for 2010 is confirmed.
"Definite progress toward these targets is expected in 2009," it added.
Siemens had said in January that sales would increase this year by double the pace of the global economy.
But delays in a large number of projects in fossil power generation operations had had an adverse effect, Siemens reported on Monday, adding it had also suffered "structural challenges in the supplier markets" and "delays recruiting experienced project engineers".
The group has booked large contracts since 2004, but has run into trouble fulfilling them since then.
In the transport division, Siemens has also faced delays in getting final attribution of major contracts, such as a Transrapid magnetic levitation line in China.
The German group's Combino tramway has experienced serious technical faults as well.
The British IT customer that cancelled a major order was not identified.
"It (Frankfurt: A0MLX5 - news) was high time" to put some order in the company's order book, Siemens boss Peter Loescher told a telephone news conference, stressing that "light had been shed" on the group's problems.
The Siemens statement said it expected the 900-million-euro impact to be "the largest piece of any additional financial burdens for 2008".
The profits was yet another blow to the group, which has been rocked by an unprecedented corrruption scandal.
Last month, Siemens said it would reorganise its corporate telecom unit as it prepared to get out of the business, eliminating 3,800 jobs while another 3,000 would be transferred to partners or other units -- its biggest cuts in years.
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