Siemens Posts Stronger-than-Expected Earnings
Germany's Siemens delivered stronger-than-expected first-quarter results thanks to growth in most of its units and the sale of a subsidiary and set new targets for its divisions.
Siemens, which is being investigated worldwide on corruption allegations, said group operating profit in the quarter ending Dec. 31 was 1.72 billion euros ($2.51 billion), up 16 percent compared with the previous year.
Analysts polled by Reuters had on average expected an operating profit of 1.55 billion euros on sales of 18.76 billion euros.
Siemens said revenue in the first quarter rose 8 percent to 18.40 billion euros and orders increased 9 percent to 24.24 billion euros.
The Munich-based company said net income rose to 6.48 billion euros mostly thanks to a 5.4 billion gain from the sale of VDO, a maker of car electronics, last year.
Siemens Chief Executive Peter Loescher, charged with overhauling Siemens, has slimmed down the unwieldy company, molding it into three major sectors aligned with global growth trends: energy, industry and healthcare.
By October 2010, the operating margin for energy operations is expected to rise to a range of 11-15 percent from previously 9-13 percent. The Industry sector is seen at a range of 9-13 percent from 9-11 percent before.
Siemens had announced its target operating margin range for healthcare operations of 14-17 percent in November.
Loescher reiterated sales this fiscal year should increase at twice the rate of global GDP growth while operating profit should grow at least twice as fast as the top line.
The trains-to-lightbulbs conglomerate also said its planned buyback program will begin on Monday.
Siemens plans to repurchase some 2 billion euros worth of shares up to the end of April 2008.
Siemens stock has lost around 20 percent in value in the past six months to a current share price of 84.69 euros. Its shares were up 2.5 percent at the market close.
Siemens trades at around 13 times estimated 2008 earnings compared with rival General Electric (GE is CNBC's parent company) at around 14 times, according to Reuters Estimates.