Siemens Profit Up 20%

Group net profit in 1995-1996 rose DM2.49 billion ($1.6 billion) from DM2.08 billion a year ago.

A DM356 million extraordinary profit from the sale of a printer division and DM140 million gain from an accounting change in currency hedging boosted net profit to DM2.99 billion.

But a gloomy outlook caused the shares to plunge despite a proposal to raise the dividend to DM1.50 per five-mark face-value share from DM1.30 last year.

Siemens anticipates moderated growth this year, it said in a statement.

In view of declining earnings, notably in the components segment, as well as restructuring measures in the medical engineering group, net income is not expected to grow in fiscal 1997, it added.

 

That flat outlook undermined investor confidence, analysts said. A catastrophe! said analyst Hans Peter Wodniok at Credit Lyonnais in Frankfurt.

Management has been predicting years of double-digit profit growth but now, we see it was just one year. Our confidence in them is gone, he added.

Peter Roe at Banque Paribas Capital Markets in London agreed. The share will be friendless for awhile.

Commenting on the 1995-1996 results, Siemens said, continuing buoyant developments abroad more than compensated for stagnating domestic business.

It also said the 1995-96 results were boosted mainly by lower restructuring costs.

The components division, which includes semiconductors, again made the largest contribution to the companys profit, but its pretax income fell to DM876 million from 1.018 billion the year before.

Siemens worldwide workforce grew to 379,000 as of September 30 from 373,000 a year earlier as the company added more jobs outside Germany than it cut domestically.

The private communications and semiconductor divisions were the only two that added to their domestic workforces.

Communications and automotive systems showed the strongest growth, with sales up 25 per cent.

Pretax income in communications rose to DM832 million from DM645 million, while the automotive systems division pretax profit was DM111 million, up from DM110 million.

Incoming orders exceeded DM100 billion for the first time, rising to 100.8 billion from 91.9 billion. Sales rose six per cent to DM94.2 billion.

Orders in the Asia-Pacific region rose 34 per cent to DM11.2 billion as Siemens reinforced its position in the region.

Domestic sales declined to DM36.4 billion from 37.9 billion due to a weak capital goods market and a recession in the construction industry.

Computers unit Siemens Nixdorf continues to struggle with falling prices. Its pretax profit fell to DM52 million from 62 million despite a six per cent rise in sales.