Wednesday April 30, 09:01 AM
Siemens sees second quarter profit tumble 67 percent
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FRANKFURT (AFP) - German engineering and electronics group Siemens (Xetra: 723610 - news) posted Wednesday a 67 percent slump in its second quarter net profit following a comprehensive review of its broad range of industrial projects.
Profit in the second quarter to March of Siemens' 2007/2008 fiscal year fell to 412 million euros (640 million dollars), a company statement said.
Analysts had expected a higher figure of 439 million euros.
Siemens sales edged up 1.0 percent to 18.09 billion euros.
The group now expects full-year earnings to stagnate, whereas it had initially forecast an increase in operating profit for the fiscal year to September.
At the same time, it maintained its outlook for internal growth at twice the rate of the global eocnomy.
Chief executive Peter Loescher said: "We have now concluded our project reviews in the fossil power business and, in total, we have a clear picture of the relevant risks.
"We have also demonstrated our commitment to increasing transparency and accountability at Siemens."
Last month, Siemens, which has been rocked by a scandal over how it obtained foreign contracts, announced it would take a charge of 900 million euros due to problems with a range of major projects.
The group, whose operations span lightbulbs, computers, power turbines and trains, said it had been unable to keep up with the contracts it signed in the past few years.
Loescher told a press conference later that the group planned to slash administrative costs by 1.2 billion euros in the next two years and said a global economic slowdown had lead to increased caution on the part of clients.
"We expect the consequences of the crisis in the finance sector to be felt in other sectors in the course of next fiscal year," Loescher said
"We already see first signs of greater cautiousness on the part of customers in our standard products business here in Germany," he added.
Despite the company's cautious tone, its shares jumped 2.29 percent to 75.07 euros in morning trade here, leading gainers on the DAX index (Xetra: news) of blue-chip shares, which was 0.27 percent higher overall.
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