Thursday July 30, 11:56 AM
Siemens new orders plunge but will meet 2009 targets
FRANKFURT (AFP) - German industrial giant Siemens (Xetra: 723610 - news) said Thursday that orders had collapsed in its latest quarter but that it had expected the setback and would still meet its full-year targets.
New orders in Siemens' third quarter to June plunged 28 percent to 17.16 billion euros (24 billion dollars), a statement said, with the poor comparison partly the result of an exceptionally high level a year earlier.
Analysts had expected a drop of 17.5 percent after Siemens announced the cancellation of one order worth around 500 million euros.
The downturn overshadowed Siemens third-quarter net profit of 1.3 billion euros, a drop of seven percent from the year-earlier period but still above analyst forecasts for one billion euros.
"As expected, the macroeconomic environment clearly left its mark on new business," Siemens chief executive Peter Loescher said in a statement. "We had already prepared for that ahead of time."
The statement added that "Siemens' strong order backlog softened the impact of the global recession on the company's revenue and profit."
Sales fell four percent to 18.35 billion euros in the quarter.
Loescher stressed the group had performed well when compared with its main competitors and added: "Our third-quarter results demonstrate that we are fully on track to achieve our targets for fiscal 2009."
Siemens expects to achieve an operating profit of 6.6 billion euros for its three main groups -- energy, industry and medical technologies.
It estimates annual sales will grow by at least twice as much as global gross domestic product.
If global GDP is negative, Siemens says a decline in its sales will be less than half the global rate.
The group will eliminate 1,600 jobs worldwide in the coming months, finance director Joe Kaeser told a telephone news conference, estimating that would cost Siemens around 100 million euros.
The group, which employs around 410,000 people worldwide, said in 2007 that it would eliminate 16,750 posts and Loescher added on Thursday that staff might also be put on short working hours.
But Siemens was still considering future acquisitions and its CEO said he was "thinking intensively" about investing in the solar energy sector.
The group also announced a contract to supply 200 sleeping cars to the Russian railway, a deal worth 320 million euros.
Russia is a focus of Siemens' efforts and it is still in talks on a possible nuclear energy alliance with the Russian group Rosatom.
Siemens shares showed a loss of 1.02 percent to 56.47 euros in midday trade on the Frankfurt stock exchange, while the DAX index (Xetra: news) on which they are listed was 0.77 percent higher overall.
"Siemens? broad diversification does not protect it anymore from the recession," Merck Finck
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