Siemens 4Q loss narrows from year earlier

[December 03, 2009]  FRANKFURT (AP) -- Germany's Siemens AG said Thursday that its losses narrowed to euro1.1 billion ($1.65 billion) in its fiscal fourth quarter, as writedowns on its Nokia Siemens Networks business were smaller than those booked a year earlier.

In 2008, the industrial conglomerate lost euro2.4 billion during the three months ending Sept. 30, largely a result of writedowns on the value of its VDO automotive parts unit, which it sold to German car parts maker Continental AG.

Siemens, based in Munich, said it lost euro1.98 billion on equity investments in the fourth quarter this year, almost entirely due to charges on the NSN business.

NSN said last month it hopes to improve its financial performance through a major restructuring drive that will see up to 9 percent of its 64,000 global employees go.

Siemens' overall fourth-quarter revenue was down more than 9 percent to euro19.7 billion from euro21.7 billion a year earlier, while orders fell nearly 16 percent to euro18.7 billion.

The figures were roughly in line with expectations -- analysts' polled by Thomson Reuters had estimated a quarterly net loss of euro1.13 billion and revenue of euro19.7 billion.

"The major risk to our 'outperform' rating on Siemens is the shape of the economic recovery and Siemens' cost cutting focus," Bernstein analyst Martin Prozesky said in a Thursday research note.

"If we do not see a strong recovery in Germany and other major economies in 2010, more aggressive cost cutting and purchasing savings from Siemens, and restructuring of the short-cycle businesses, then our forecasts will be too bullish," Prozesky said.

Bernstein has a price target of euro73 on the shares, which were trading 2.4 percent lower at euro66 in Frankfurt.

Siemens, which makes products ranging from light bulbs to high-speed trains, said it anticipates that conditions in the manufacturing sector and world financial markets will remain challenging in the current fiscal year.

The company expects a strong order backlog to have a stabilizing effect in the current fiscal year, in which it foresees a mid-single-digit percentage decline in organic revenue.

It forecast operating profit of between euro6 and euro6.5 billion in fiscal 2010 -- compared with euro7.5 billion in what it calls "total sector profit" last year.

Chief executive Peter Loescher stressed that "the overall market environment will remain challenging in 2010."

Siemens' fourth-quarter pre-tax earnings, which do not include the NSN charges, were up 27 percent to euro1.9 billion from euro1.5 billion a year earlier.

The company's industrial sector saw its pretax earnings fall to euro562 million from euro841 million, while the energy sector's earnings rose to euro878 million from euro466 million.

The energy sector includes Siemens' environmental portfolio, which has been doing well as the world spends more on becoming energy-efficient.

"We see substantial further potential worldwide in the area of environmental technology," Loescher said.

Siemens' health-care sector also saw pretax earnings rise to euro483 million in the fourth quarter from euro226 million a year earlier.

The earnings report came after Siemens said Wednesday it had agreed settlements with six more former managers, including former chief executives Heinrich von Pierer and Klaus Kleinfeld, related to a massive corruption scandal at the company which started unfolding in 2006.

The settlements, with a total of nine managers so far, will have to be approved at the company's shareholder meeting in late January.

The company was accused of making improper payments to secure work.

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[Associated Press; By GEORGE FREY]

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