German industrial conglomerate Siemens Q3 net profit down 7 percent to euro1.3 billion

Siemens Q3 net profit euro1.3 billion, down 7 percent

FRANKFURT — German industrial conglomerate Siemens AG said Thursday that net profit for its fiscal third quarter fell 7 percent as the global recession curbed demand for its products, which range from light bulbs to high-speed trains.

The Munich-based company said net profit in the April-June period fell to euro1.3 billion ($1.8 billion) from euro1.4 billion in the year-ago quarter.

Siemens, whose fiscal year begins in October, said revenues for the third quarter fell 4 percent to euro18.3 billion from euro19.2 billion.

The company confirmed its full-year targets, even in the “current challenging global economic environment.”

Siemens said it continues to expect total sectors profit for fiscal 2009 to exceed the prior-year level of euro6.6 billion. Total sectors profit is a pretax measure.

The company also said it expects revenue to grow at twice the level of global gross domestic product. Siemens measures business on GDP because it is a good gauge as to how much the world will invest in capital goods or large infrastructure projects. If GDP growth is negative, the aim would be for the company’s percentage decline in revenue to be less than half the rate of decline in global GDP.

“Our third-quarter results demonstrate that we are fully on track to achieve our targets for fiscal 2009,” chief executive Peter Loescher said in a statement.

He said the company “did particularly well” compared with its main competitors.

“As expected, the macroeconomic environment clearly left its mark on new business. We had already prepared for that ahead of time. We are also carefully considering the challenges ahead. We will continue the rigorous pursuit of our corporate policy focused on sustainability,” Loescher said.

The company said the energy division achieved a 40 percent increase in profit year-over-year due to better economies of scale, more efficient project execution and a better project mix. The health care business reported lower profit due to added costs related to specific contracts.

Siemens said orders of approximately euro17.2 billion in the third quarter were well below the prior-year level of nearly euro24 billion. The decline is attributable in part to the high order level posted in the prior year, which included a major deal worth roughly euro1.4 billion from the Belgian state railway system.

Siemens has said it stands to gain from a number of factors despite the global economic downturn.

For example, the company hopes to see about euro15 billion ($21 billion) in new orders because of global government stimulus programs, and said it has euro1 billion in infrastructure project orders in hand from South Africa, which is building furiously ahead of the 2010 World Cup of football there next summer.

Earlier this month, Siemens, along with 11 European companies also outlined a plan called Desertec, to build a massive solar power network across Saharan Africa. Though only still in the conceptual phase, the companies said the project could satisfy 15 percent of Europe’s energy needs by 2050.

Siemens generated about a quarter of its euro77 billion ($108 billion) in fiscal 2008 revenues from its renewable energy portfolio, an area it will continue to focus on, even while it intends to also continue providing solutions in the nuclear, gas and coal sectors.

For the first nine months, Siemens said net profit fell nearly 60 percent to euro3.6 billion from euro8.3 billion in the year-earlier period. Nine-month revenues were however 2 percent higher, at euro57 billion.

Siemens shares closed up 3 percent Wednesday at euro57.05.

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