Siemens Returns To Growth, Order Intake Climbs 22%

(Rewrites, adds detail)

By Archibald Preuschat

Of DOW JONES NEWSWIRES

MUNICH -(Dow Jones)- Siemens AG (SI) Thursday posted a 12% rise in third-quarter net profit, and increased sales and order intake for the first time in seven quarters, marking a return to growth after the demand slump brought about by the recession.

Siemens posted especially strong results in its short-cycle businesses, which are closely linked to the economic cycle, such as industry automation and its light bulb maker Osram.

But big-ticket spending also returned. Siemens' third-quarter order intake was up 22%, bringing the order backlog to a record level of EUR89 billion, driven by new orders for Siemens' renewable division.

Net profit for the quarter ended June 30 was EUR1.41 billion compared with EUR1.26 billion a year earlier.

Still, net profit was weighed down by a lower operating profit in its equity investments, such as loss-making Nokia Siemens Networks, a joint venture with Nokia Corp. (NOK). Operating profit in its equity investments in the period fell to EUR2 million from EUR157 million in the year earlier, when the figure was boosted by a divestment gain from Fujitsu Siemens Computers.

Sales in Siemens' core business were up 4% to EUR19.17 billion.

Closely-watched operating profit at its core businesses of energy, industry and healthcare was up 40% to EUR2.33 billion on cost cutting after the company axed 12,600 jobs as part of plans to save EUR2 billion in selling, general and administrative expenses.

After the first nine months of the fiscal year, operating profit from Siemens' core business was EUR6.7 billion, just EUR800 million below fiscal 2009's EUR7.5 billion.

We will "clearly exceed the level of the year prior," said Chief Executive Peter Loescher in a statement referring to the guidance for fiscal year 2010.

Siemens also maintained that this year's sales are expected to be a mid-single-digit percentage below the previous year's level.

Siemens is a barometer for the world's manufacturing industry, with 402,000 employees in 190 countries and products that span hospital equipment, transportation, factory automation gear and power turbines.

Amsterdam-based Philips last week posted sharply higher net profit and raised its outlook for the year, but the company's shares still fell sharply amid fears of slowing sales growth, underscoring lingering uncertainty about the strength of the economic recovery. Like Siemens, Philips has also looked to emerging markets for growth.

Meanwhile, GE posted a 16% rise in profit earlier this month, the first time the company's earnings have increased since the fourth quarter of 2007. It raised its dividend by 20%--the first increase since early last year--and reinstated a share buyback plan in a twin move that followed a lackluster investor reception to its financial turnaround.

Siemens' results beat expectations for an operating profit in its core business of EUR2.09 billion on sales of EUR18.58 billion, according to a Dow Jones Newswires poll of 16 analysts.

-By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18; archibald.preuschat@dowjones.com