Siemens posts strong results, tries to put scandal behind
Engineering giant Siemens posted unexpectedly strong results and orders on Wednesday and tried to turn the page on a scandal over which it intends to seek damages from former directors.
By Agencies |
BERLIN: Engineering giant Siemens posted unexpectedly strong results and orders on Wednesday and tried to turn the page on a scandal over which it intends to seek damages from former directors.
Net profit for the third quarter of Siemens' 2007-2008 fiscal year reached 1.42 billion euros (2.21 billion dollars), a statement said. That was a drop of 31 percent from the equivalent figure a year earlier, but it exceeded the expectations of analysts polled by Dow Jones Newswires, who had forecast an average net profit of 948 million euros.
The year earlier figure had also benefited from the creation by Siemens of a joint venture with Finnish rival Nokia in the telecommunications network sector. Siemens chief executive Peter Loescher told a telephone news conference that the company's 500 top directors would have to buy shares in the parent group, a system aimed at reinforcing their long-term motivation.
The value of the shares would range from 50 percent to 300 percent of the executive's annual gross salary, Loescher said. Siemens released the results a day after saying it would pursue 11 former directors for damages because it felt they had ignored widespread corruption revealed nearly two years ago.
Among the figures targeted were former Siemens bosses Heinrich von Pierer and Klaus Kleinfeld, the company said. Kleinfeld is now the president and chief executive officer of aluminium giant Alcoa. Presenting its third-quarter results, Siemens said sales had gained 10 percent to 19.18 billion euros, and that its order book stood at 23.68 billion euros, a 21 percent increase that augured well for future profits.
Analysts had expected sales of 18.67 billion euros and orders of 21.29 billion. Looking ahead, Loescher was quoted by the statement as saying that "we still plan to grow at twice the rate of global GDP" or gross domestic product.
Loescher nonetheless warned during a telephone news conference that Siemens foresaw a slowdown in orders, in particular for the medical technologies division in the United States. The group forecast that full-year operating profit from its three main divisions - industry, energy and medical technologies - would come to between 8.0-8.5 billion euros.
Siemens recently announced it would cut almost 17,000 jobs worldwide, as Loescher imposes a vast restructuring aimed to make the company more profitable and correct practices that led to a scandal which broke in 2006.
The sprawling conglomerate has acknowledged that 1.3 billion euros was funneled into various funds used to obtain foreign contracts, and that the practice was widespread across its numerous divisions.
In addition to top directors, around 5,000 managers would also be offered Siemens shares at a discount to their market price, Loesher said.
The 160-year-old group manufactures products from light bulbs and medical equipment to railway trains and power stations, and employs around 400,000 people. It agreed in October to pay a fine of 201 million euros to put an end to some German legal proceedings but is also the subject of a potentially damaging probe by the US Securities and Exchange Commission.
Net profit for the third quarter of Siemens' 2007-2008 fiscal year reached 1.42 billion euros (2.21 billion dollars), a statement said. That was a drop of 31 percent from the equivalent figure a year earlier, but it exceeded the expectations of analysts polled by Dow Jones Newswires, who had forecast an average net profit of 948 million euros.
The year earlier figure had also benefited from the creation by Siemens of a joint venture with Finnish rival Nokia in the telecommunications network sector. Siemens chief executive Peter Loescher told a telephone news conference that the company's 500 top directors would have to buy shares in the parent group, a system aimed at reinforcing their long-term motivation.
The value of the shares would range from 50 percent to 300 percent of the executive's annual gross salary, Loescher said. Siemens released the results a day after saying it would pursue 11 former directors for damages because it felt they had ignored widespread corruption revealed nearly two years ago.
Among the figures targeted were former Siemens bosses Heinrich von Pierer and Klaus Kleinfeld, the company said. Kleinfeld is now the president and chief executive officer of aluminium giant Alcoa. Presenting its third-quarter results, Siemens said sales had gained 10 percent to 19.18 billion euros, and that its order book stood at 23.68 billion euros, a 21 percent increase that augured well for future profits.
Analysts had expected sales of 18.67 billion euros and orders of 21.29 billion. Looking ahead, Loescher was quoted by the statement as saying that "we still plan to grow at twice the rate of global GDP" or gross domestic product.
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The results helped Siemens shares gain 4.32 percent to 76.38 euros in midday trading on the Frankfurt stock exchange, where the Dax index of blue-chip issues had gained 0.81 percent overall. Loescher nonetheless warned during a telephone news conference that Siemens foresaw a slowdown in orders, in particular for the medical technologies division in the United States. The group forecast that full-year operating profit from its three main divisions - industry, energy and medical technologies - would come to between 8.0-8.5 billion euros.
Siemens recently announced it would cut almost 17,000 jobs worldwide, as Loescher imposes a vast restructuring aimed to make the company more profitable and correct practices that led to a scandal which broke in 2006.
The sprawling conglomerate has acknowledged that 1.3 billion euros was funneled into various funds used to obtain foreign contracts, and that the practice was widespread across its numerous divisions.
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Loescher was quoted on Wednesday as saying: "Our new management incentive system should play an important role in our progress ahead, along with worldwide employee participation in Siemens' success through equity ownership." In addition to top directors, around 5,000 managers would also be offered Siemens shares at a discount to their market price, Loesher said.
The 160-year-old group manufactures products from light bulbs and medical equipment to railway trains and power stations, and employs around 400,000 people. It agreed in October to pay a fine of 201 million euros to put an end to some German legal proceedings but is also the subject of a potentially damaging probe by the US Securities and Exchange Commission.
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