Despite a tough year in the semiconductor market -- Siemens' most profitable division last year -- analysts said reduced restructuring charges alone should put the company's target in reach. Some said the company could raise its dividend about 10 pfennigs from the 1.40 marks it paid in 1994/95, or pay bonus dividend commemorating its 150th year in 1996/97. Siemens is scheuled to release its preliminary results for 1995/96 on Wednesday at midday. "Performance should be better in most divisions, but growth will be a combination of that and lower restructuring charges," said Hans Peter Wodniok at Credit Lyonnais in Frankfurt. Wodniok sees net profit at 2.47 billion marks, or 4.70 marks a share, just shy of the 20 percent growth projection, and rates the stock a cautious "add". Peter-Thilo Hasler of Vereinsbank Research notes that recent management projections of 20 percent growth are already scaled back from the forecast of 20 to 25 percent growth made at the annual news conference last December. Anything under 20 percent would be "a catastrophe", Hasler said.
After outperforming the Frankfurt stock market's DAX index in 1995, Siemens stock has turned in a lackluster performance this year. It is now trading at about 79 marks, unchanged from December 1995, and down from highs of about 85 marks in May.
Siemens posted group net profit of 2.084 billion marks in 1994/1995, and its net profit in the first nine months of 1995/96 rose 16 percent to 1.65 billion marks. In a magazine interview last week, chief executive Heinrich von Pierer said he saw no reason to deviate from earlier bullish profit predictions. But he also said Siemens was earning too little compared with its international rivals. "We confirmed again in July that Siemens can raise its net profit by about 20 percent," von Pierer told Der Spiegel. "That remains the case."
Last December, von Pierer projected that costs for trimming personnel and reorganising enterprises in 1995/96 would fall by 500 million marks from 2.2 billion marks the previous year.
Siemens continues to shift jobs out of Germany where labour costs are high, to countries where labour is cheaper. In 1994/95, it cut 7,000 German jobs and added 4,000 abroad. Personnel director Werner Maly said on Monday Siemens cut about 6,000 domestic jobs in 1995/96. But it showed a net rise in its worldwide workforce, as the domestic job cuts were more than offset by increases in jobs in other countries, he said.ggishness in the chip market in the past year has caused profit slumps for Siemens rivals such as Philips NV Motorola Inc and NEC.
