German electronics and engineering giant Siemens has seen its fiscal third quarter profit fall by 13pc. The drop is less than the company expected due to gains in its power generation and medical device business segments.
Siemens’ net income for the three months to June fell to €632m from €725m in the same period last year. Overall sales revenues fell 15pc to €17.3bn during the third quarter.
Siemens’ CEO Heinrich von Pierer said that the company is seeing gradual improvements on the bottom line as a result of restructuring. In the past two years the company has cut more than 32,000 staff in an effort to bolster profits in its struggling IT and telecommunications divisions.
Von Pierer said: “While the absence of demand growth in key markets, combined with significant currency translation effects, lowered sales and orders year-over-year, the trend is more gradual on a consecutive-quarter basis. It is even more satisfying that most of our groups were able to move further toward their target earnings ranges for fiscal 2003. I expect a similarly positive performance in the fourth quarter. Clearly the operation 2003 measures are taking effect, and they are being consistently applied.”
Siemens’ Information and Communication Networks (ICN) division reported a loss of €125m, including €72m in charges primarily at Efficient Networks. On a consecutive quarter basis, ICN’s group profit margin improved. Third-quarter earnings at the Enterprise Networks division were €62m, up from the prior-year period, but revenue declined to €893m from €955m a year earlier due to currency translation effects.
ICN’s Carrier Networks and Services business also reported lower sales year-over-year, €801m compared to €1.1bn, and posted a loss of €128m. The division’s third-quarter loss a year earlier was €183m. For ICN as a whole, sales dropped 23pc to €1.687bn from €2.190bn in the prior-year period, including a 6pc negative currency translation effect.
Siemens Medical is now the company’s most profitable unit, contributing a profit of €332m and boosting its operating margin to 19.3pc from 13.9pc a year ago.
By John Kennedy