Orders, revenue growth lifts Siemens Q3 outlook

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By Nagendra Padala | June 30, 2010 1:31 AM EST

German industrial conglomerate Siemens AG expects strong profitability in the third quarter as new orders and revenue growth, driven by strong demand in the emerging countries, coupled with impressive recovery in its short-cycle businesses.

The company anticipates total new orders and revenue growth at its industry, energy and healthcare sectors to exceed last year numbers as well as the previous quarter.

For the industry, energy and healthcare sectors, the total orders in the third quarter will increase from 16.2 billion euros in the third quarter of 2009. Total revenue is expected to rise from 17.4 billion euros a year ago, the company said. In the second quarter, new orders were about 17.1 billion euros , while revenue was 17.5 billion euros.

“Due to continuing cost productivity in the third quarter, total sectors profit was likely to closely approach the results from operations in the strong previous quarter while including no significant one-time effects,” chief financial officer Joe Kaeser said in a statement.

The company’s industry sector profited again in the third quarter on business climate improvements for its shorter-cycle activities, where its Osram unit had strong demand for light-emitting diodes. The industry sector supplies manufacturing, transportation, building and lighting systems.

Siemens expects revenue for the industry sector to be above 8.3 billion euros from the previous quarter due to improvements in its shorter-cycle activities. Both profit and new orders in the industry sector will probably surpass the prior-year figures of 783 million euros and 8.0 billion euros, respectively.

The industry sector posted external revenue of 33.9 billion euros and profit of 2.7 billion euros in fiscal 2009.

For the third quarter, the revenue and profit from energy sector is expected to be slightly below the profit of 863 million euros and revenue of 6.4 billion euros reported in the year-ago quarter. But the new orders will probably exceed the prior-year figure of 6.9 billion euros.

The energy sector, which offers power generation, transmission and distribution services, recorded external revenue of 25.4 billion euros and profit of 3.3 billion euros in fiscal 2009.

In the healthcare sector, the company expects profit to be more than 270 million euros reported in the third quarter of 2009. Revenue and new orders are expected to be above the corresponding figures for both the prior year and the previous quarter, the company said.

The company's healthcare sector, which reported external revenue of 11.9 billion euros and profit of 1.5 billion euros in 2009, provides services in diagnostic systems, therapeutic technologies and knowledge processing – including information technology and systems integration.

However, all third-quarter projections reflect substantial currency translation effects due to the strength of the U.S. dollar during the quarter, Siemens said.

Siemens AG, which has a business portfolio of activities in the field of electronics and electrical engineering, is presently serving seven business areas including information and communications, power generation, and power transmission and distribution. The company had around 4,05,000 employees worldwide in 190 countries.

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