German engineering giant Siemens AG posted substantially higher operating and net profits for its first quarter on Thursday despite flat sales, as it continued to reap the rewards of tough restructuring.
Both operating profit, up almost a quarter from the year-ago period at 1.36 billion euros ($1.7 billion), and net profit up 39 percent at 726 million beat analysts' expectations. Sales were slightly lower than forecast at 18.33 billion euros.
Chief Executive Heinrich von Pierer told journalists he was "very happy with the quarter" and repeated his forecasts of rising sales and double-digit percentage growth in net income for the fiscal year to the end of September.
Investors were also satisfied, pushing the stock up 1.4 percent to 68.09 euros by 0929 GMT, outperforming Germany's blue-chip Dax index which was up 0.6 percent.
"Siemens has once again managed to beat expectations," said analyst Roland Pitz of HVB bank. "It's well positioned to take advantage of any upturn in the wider economy."
The closely watched Information and Communications division, which accounts for almost a third of Siemens' business, confirmed a turnaround as Siemens Mobile sold a record number of handsets and troubled fixed-line telecoms unit ICN made a small operating profit - 51 million euros - for a second straight quarter.
Siemens Mobile reported operating profit more than doubled to 123 million euros after the division sold 15.2 million handsets in the strong Christmas quarter and von Pierer said the current quarter had also got off to a good start.
But the company's most profitable division Medical Solutions, which sells most of its high-tech equipment in the United States, saw sales fall 10 percent through negative currency effects from the weak dollar, though operating profit still rose by a third to 327 million euros.
The division overtook Power Generation, which is still paying for the integration of troubled French peer Alstom's industrial turbines business, as the most profitable division.
Power Generation saw operating profit fall 40 percent to 245 million euros although a seven-percent increase in sales reflected new volume from the acquisition.
Siemens said it would book a gain of some 800 million euros in the current quarter from the sale of 150 million shares in chipmaker Infineon - representing a fifth of the company which used to be part of Siemens.
Chief Financial Officer Heinz-Joachim Neubuerger told journalists this would be used to replenish liquidity after the firm paid 1.3 billion euros into its pension fund in October.
Von Pierer said Siemens wanted to make sure it was in a position to act quickly to make acquisitions although he said he currently had no particular targets in mind.
"A heavy purse makes for a light heart!" he said in answer to journalists' questions, refusing to be drawn on his intentions. He added that there was "no news" on possible acquisitions of further parts of Alstom.
Von Pierer said he was keeping a close eye on UK engineering firm Invensys although he was not interested in its current sale of non-core businesses, which he said were too small.
Von Pierer also appeared to put an end to long-running speculation over the building of a high-speed magnetic-levitation rail link between Beijing and Shanghai, a project worth billions of dollars.
"I want to put an end to this once and for all. There is no way on earth that the Shanghai-Beijing stretch will be Transrapid," he said, referring to Siemens' consortium with steel and engineering firm ThyssenKrupp.
Comments
Comments are closed.