Orders and revenue rise, special burdens impact profits
Munich, Germany - Siemens achieved strong growth again in the third quarter of fiscal 2011. New orders climbed 20 percent year-over-year. Revenue rose two percent. These figures include negative currency translation effects that took five percentage points from new orders as well as revenue. Income from continuing operations was below the prior-year figure. This decline was due to negative profit impacts in connection with an arbitration decision and in connection with the particle therapy business. "We continued to grow in the third quarter and are on track to reach our targets for fiscal 2011. New orders rose again sharply, driven by a large order at Mobility. We're vigorously tackling operating challenges. Our markets are still robust, although risks are tending to increase in the global economic environment," said Siemens President and CEO Peter Löscher.
In the third quarter, new orders climbed 20 percent to €22.9 billion. This figure includes the order, worth €3.7 billion, to supply Deutsche Bahn with trains of the new ICx generation. Revenue increased two percent to €17.844 billion. Negative currency translation effects – particularly in the U.S., India and China – reduced growth rates for new orders and revenue by five percentage points. The book-to-bill ratio in the third quarter was 1.29. The order backlog reached a record high of €96 billion, after totaling €92 billion at the end of the second quarter of fiscal 2011.
The Industry Sector was the largest growth driver for new orders, with an increase of 54 percent and growth in all Divisions. Revenue rose seven percent. At the Energy Sector, new orders remained at the level of the comparable prior-year period, while revenue increased five percent. The Sector again profited from a strong development at the Fossil Power Generation Division. In a difficult business environment, new orders at the Healthcare Sector declined seven percent and revenue declined nine percent. Revenue was burdened by a reduction of sales proceeds of about €100 million in connection with particle therapy projects. In the third quarter, Healthcare reevaluated the commercial feasibility of particle therapy for general patient treatment. Going forward, the Sector plans to focus certain particle therapy projects primarily on research.
Total Sectors' profit in the third quarter was €1.1 billion, down from €2.1 billion in the same period a year earlier due to profit impacts of a negative €381 million in connection with the reevaluation of the commercial feasibility of particle therapy and as a consequence of the arbitration decision regarding Areva. In May 2011, an arbitral tribunal reached a decision on the modalities of Siemens' withdrawal from the joint venture Areva NP. As a result of this decision, Siemens was required to pay Areva S.A. €648 million plus interest. The pretax profit impact in connection with the decision of the arbitral tribunal in the third quarter was a negative €682 million. Due to the decrease in Total Sectors' profit, income from continuing operations declined to €763 million, compared to €1.428 billion in the comparable prior-year period.
The above-stated figures for new orders, revenue and income from continuing operations do not include Osram or Siemens IT Solutions and Services. Since the second quarter of fiscal 2011, these businesses have been reported as discontinued operations. The prior-year figures have been adjusted accordingly. Income from discontinued operations in the reporting period was a negative €262 million. Osram reported net income in the third quarter of €56 million on slightly higher revenue. Siemens IT Solutions and Services, on the other hand, posted an after-tax loss of €305 million. Siemens' net income totaled €501 million compared to €1.4 billion in the comparable prior-year period.
In fiscal 2011, Siemens expects organic order intake to show a significant increase compared to the order intake of €74.1 billion for continuing operations in fiscal 2010. Supported also by its already strong order backlog, the company expects revenue, which was €69 billion for continuing operations in fiscal 2010, to return to mid-single-digit organic growth. Siemens further anticipates income from continuing operations to be at least €7.5 billion. Income from continuing operations in fiscal 2010 was €4.3 billion. This outlook excludes the negative impact of €472 million after taxes related to the arbitration decision mentioned earlier and other effects from legal and regulatory matters that may arise.
Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. For over 160 years, Siemens has stood for technological excellence, innovation, quality, reliability and internationality. The company is the world's largest provider of environmental technologies. More than one-third of its total revenue stems from green products and solutions. In fiscal 2010, which ended on September 30, 2010, revenue from continuing operations (excluding Osram and Siemens IT Solutions and Services) totaled €69 billion and net income from continuing operations €4.3 billion. At the end of September 2010, Siemens had around 336,000 employees worldwide on the basis of continuing operations. Further information is available on the Internet www.siemens.com.
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