Siemens surprises with heavy drop in Q3 profit
German industrial giant Siemens unveiled Thursday unexpected charges that pushed its third-quarter net profit 65 percent lower than in the same period a year earlier to 501 million euros ($719 million).
The drop was due largely to the "re-evaluation of the commercial feasibility of particle therapy," part of the group's medical equipment activities, and the result of an arbitration decision on a joint venture with the French group Areva, a Siemens statement said.
Analysts polled by Dow Jones Newswires had expected a much smaller decline in net profit to 949 million euros.
An arbitration panel has ordered Siemens to pay Areva 648 million euros plus interest following Siemens' withdrawal from a joint venture with the French company, and analysts had included that charge in their calculations.
What they did not expect was another charge of 381 million euros owing to Siemens' re-evaluation of the feasibility of particle therapy, a new treatment for cancer.
The German group also booked a loss of 305 million euros in its information technology division which is being sold the the French firm Atos.
Siemens chief executive Peter Loescher gave a prudent outlook for the group's full fiscal year, which runs from October 1 to September 30, saying: "Our markets are still robust, although the risks are increasing somewhat in the global economic environment."
Loescher's contract has been renewed for five years until 2017.
The company also reaffirmed its forecast for continuing operations to generate a profit of at least 7.5 billion euros, excluding payment to Areva.
They had generated a profit of 4.3 billion euros in the previous exercise.
Siemens also expects new orders to rise significantly, and sales growth of around five percent.
Sales at its core industry, energy and medical technology divisions edged up by 2.0 percent from the third quarter of its previous fiscal year meanwhile, to 17.84 billion euros.
New orders surged by 20 percent to almost 23 billion euros, thanks to a huge new German railway order.
Siemens makes a wide range of products, from hearing aids to wind turbines and high-speed trains.
© 2011 AFP