Siemens Says Profit From Main Units Rose 10%, Keeps 2009 Goals

By Sheenagh Matthews

March 27 (Bloomberg) -- Siemens AG, Europe’s largest engineering company said profit from at its main industry, energy and healthcare units rose at least 10 percent in the last three months.

Siemens advanced as much as 4.5 percent in Frankfurt trading to 46.15 euros. The company is sticking to its earnings forecast for the year after the energy business doubled its profit margin in the first quarter, Chief Financial Officer Joe Kaeser said yesterday at the company’s Munich headquarters.

Siemens is counting on its energy unit, which builds fossil-fuel power plants, wind turbines and power distribution equipment, to counter the effect of the economic slump on its industry and health-care divisions. The three main units account for 90 percent of group sales. The company is cutting purchasing and personnel costs and will “significantly” increase the number of employees working shortened hours from about 7,000 now, Kaeser said.

“We’re the only company in the capital-goods sector to stick to our forecasts since July,” Kaeser said. “We understand our forecast as a commitment. It’s clear that the times haven’t got any better.”

The company which expects to take in orders at a faster pace than sales for the quarter, has seen some order delays but no cancellations, he said. Siemens aims for sector profit, or earnings from the three main divisions, of 8 billion euros ($10.8 billion) to 8.5 billion euros this year.

Siemens was trading up 3.9 percent at 46.09 euros as of 9:16 a.m. in Frankfurt. The stock has lost 29 percent in the past six months in Frankfurt trading. The company, which has refocused its business on medical scanners, gear boxes and power equipment, has a market value of 40.6 billion euros.

Solar Boost

Siemens plans to expand in solar energy, with a focus on solar thermal power, which turns sunlight into heat, as opposed to photovoltaics, which converts solar energy directly into electricity, Kaeser said yesterday. The company earlier this week bought a 28 percent stake in Archimede Solar Energy SpA to add solar thermal technology and plans to take a majority holding in the Italian company.

The industry division is suffering as automotive and machine-building clients hold back investments, the CFO said. The biggest declines will come from the Osram light-bulb business and industry automation, where Siemens expects to sell “considerably” fewer motion control systems.

The U.S. healthcare market is “unsatisfactory” as the government spends less on hospital equipment, and the decline may spread to Europe, the CFO said. Siemens still plans to win market share and predicts an increase in earnings at the unit this year.

The manufacturer is seeing a “massive increase” in demand at its financial services business, which lends customers money to buy its products. Siemens is in a better position than banks to assess its customer’s value at risk, which measures the risk of loss on certain assets, Kaeser said.

Government stimulus packages won’t boost orders until 2010 and the company doesn’t expect a revival in the short term, he said.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net.