Siemens 1Q net profit down 81 pct to euro1.23 bln

FRANKFURT, Germany - Industrial conglomerate Siemens AG said Tuesday its fiscal first quarter net profit fell 81 percent, largely due to one-time effects stemming from the sale of its VDO Automotive business last year.

The Munich-based maker of products ranging from trains to light bulbs said net profit for the quarter from October through December fell to euro1.23 billion ($1.62 billion) from euro6.475 billion a year ago. However, the sale of VDO and other assets had contributed euro5.4 billion to income last year.

First quarter revenues rose 7 percent to euro19.6 billion from euro18.4 billion a year ago, while the company's order book for the period fell 8 percent to euro22.2 billion.

The company said it was sticking to its target for reaching total sector profit — earnings at the industry, energy and health care divisions — of between euro8 billion and euro8.5 billion in 2009.

"Siemens got off to a good start in fiscal 2009, including better order development than most of our competitors in the first quarter," the company's Chief Executive Peter Loescher said in a statement.

"Revenue increased strongly. Total sectors profit clearly exceeded the prior-year level. Therefore we are sticking to our 2009 targets, even though reaching them has become more ambitious. While we are closely monitoring market conditions on a quarterly basis, we are progressing through the year strong, confident and focused," Loescher said.

UniCredit analyst Roland Pitz said Siemens' confirmation of its earnings before interest and taxes guidance of between euro8 billion and euro8.5 billion was positive.

"Against the overall solid performance in Q1, we will not change our "Buy" rating," Pitz said. He has a target price on the shares of euro70.

Siemens said its industry segment led the company's earnings for the quarter, with profit of euro907 million, though it was 9 percent lower from euro994 million a year ago. Siemens said that within the industry segment, automotive was strongest, but that profitability had fallen due to lower volume and a less favorable product mix.

The energy segment saw profit of euro756 million, well above the year-ago figure. Fossil fuel power generation contributed the most to those profits, as year-ago results were hampered by charges. Strong order backlogs at renewable energy and oil and gas enabled both divisions to raise revenue, increase capacity utilization and significantly improve margins, Siemens said.

The health care sector saw profit increase to euro342 million, where imaging and the IT division was one of Siemens top profit contributors in the quarter.

Siemens shares were up 4.1 percent at euro45.38 in Frankfurt afternoon trading.

Siemens said Monday it has decided to pull out of a nuclear power plant joint venture with French company Areva SA by 2012, citing a lack of "entrepreneurial influence."

Siemens said last week it would consider dropping its 34 percent stake in the venture, Areva NP. On Monday, it said the company would terminate its shareholder agreement with Areva by Jan. 30, 2012, and sell the stake to the French company, which owns the remaining 66 percent.

It said that the purchase price of its stake would be agreed by the two companies on the basis of their shareholder agreement.

Siemens said it "will further evaluate all available options to continue its commitment in the nuclear power plant business."

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