German telecom and electronics services company Siemens AG on Wednesday reported a sharp fall in its third-quarter net profit in the absence of a huge gain from discontinued operations that was included in the year-ago quarter's results. On a continuing operations basis, the company posted earnings growth in the quarter. Siemens also confirmed its outlook for fiscal 2008.

In a separate release, Siemens announced the appointment of Jens Michael Wegmann as the chief executive officer of the Industry Solutions Division of its Industry Sector, succeeding Jørgen-Ole Haslestad, who will be leaving the company in September at his own request.

For the third quarter, the company's net income was 1.42 billion euros, down from 2.07 billion euros a year ago. The prior-year quarter results included a gain of 1.7 billion euros in discontinued operations related to the transfer of the carrier business into Nokia Siemens Networks. Meanwhile, this year's results included a loss of 56 million euros from discontinued operations.

Net income attributable to shareholders of the company declined to 1.37 billion euros from 2.03 billion euros in the prior-year quarter. Earnings per share were 1.54 euros, compared with 2.18 euros in the prior-year period.

Income from continuing operations rose to 1.48 billion euros from 608 million euros in the prior-year quarter. Earnings per share from continuing operations were 1.61 euros, up from 0.63 euros last year.

Siemens said that its three sectors delivered 2.08 billion euros in total sector profit, up 33% from 1.57 billion euros a year-earlier, with particular strength in the Industry and Energy Sectors.

Orders rose 21% in the quarter to 23.68 billion euros. Quarterly revenue reached 19.18 billion euros, up from 17.52 billion euros in the same quarter last year. Revenue growth included double-digit increases in the Energy and Healthcare divisions and 8% growth in the Industry division. Order growth was well-balanced, with double-digit expansion in all sectors, the company noted.

The results included negative currency translation effects of 7 percentage points on orders and 6 percentage points on revenue. On an organic basis, excluding the net effect of portfolio transactions and currency translation, orders climbed 26% and revenue rose 13% from the previous year.

The region comprising Europe, the Commonwealth of Independent States, or CIS, and Africa showed 40% order growth and 12% revenue growth in the third quarter.

Revenue of the Industry Sector rose to 9.42 billion euros from 8.75 billion euros in the third quarter of fiscal 2007. The Energy sector revenue rose 19% to 5.83 billion euros, with all divisions contributing to the increase. Healthcare revenue totaled 2.68 billion euros in the quarter, a 10% rise from the previous year.

The company recently said that it plans to cut a total of 16,750 jobs as part of its cost-cutting and restructuring efforts.

Looking ahead, Siemens continues to expect that fiscal 2008 group profit from operations and income from continuing operations will match the levels achieved in fiscal 2007. The company also said that full-year organic revenue is expected to grow at twice the rate of global GDP growth.

For fiscal 2009, Siemens expects more challenging conditions in the global economy. However, the company projects to grow at twice the rate of global GDP. Total sectors profit for fiscal 2009 is expected to be in the range of 8.0 billion euros - 8.5 billion euros, with growth in income from continuing operations exceeding the total sector profit growth.

Source:RTTNews