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Siemens Says to Raise Targets After CEO Resigns

German industrial conglomerate Siemens will set higher profitability targets for most of its businesses to reach by 2010, it said on Thursday, a day after Chief Executive Klaus Kleinfeld resigned.

"We are introducing a new programme, 'Fit for 2010', with ambitious targets for growth, capital efficiency and cash conversion at the corporate level, and with higher margin ranges at a majority of our groups," Siemens said in a statement.

The trains-to-lightbulbs conglomerate, which is battling a series of corruption investigations, was expected to give more details of the new targets later on Thursday.

Siemens confirmed all divisions had reached their margin targets in the fiscal second quarter to the end of March, as promised by Kleinfeld shortly after he became CEO two years ago.

Factory-automation unit Automation and Drives, Power Transmission and Distribution, healthcare unit Medical Solutions and automotive unit VDO -- a business which is to be listed or sold -- all beat their targets.

Siemens confirmed the forecast-beating key results it had released on Tuesday night before Wednesday's crucial board meeting on Kleinfeld's future, showing that operating profit leapt 49% and sales rose 10% in the quarter.

Driven by Europe

Sales growth in the quarter was driven by Europe, where revenues grew 16% excluding Germany and 6% in Germany.

Siemens used net cash of 901 million euros ($1.23 billion) in the quarter, including a 3.8 billion-euro cash payment for the diagnostics business it bought from Bayer.

In the first half, net cash provided by operating activities from continuing operations more than doubled to 3.881 billion euros from 1.732 billion in the year-earlier period.

Kleinfeld said on Wednesday he was no longer prepared to stay on beyond the expiry of his contract at the end of September after divisions within the supervisory board about extending his contract became public.

No successor was immediately apparent.

His statement widened a leadership vacuum at the company after Chairman Heinrich von Pierer quit last week, hoping to stem the escalating effects of investigations into suspected bribery by current and former Siemens staff.

Neither Kleinfeld nor von Pierer has been personally implicated in the corruption investigations.

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