Siemens profit doubles on Infineon sale

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Siemens profit doubles on Infineon sale

German electronics company Siemens has reported a sharp rise in quarterly profit after selling a stake in chip maker Infineon Technologies.

However, Siemens warned it may have difficulty reaching its fiscal-year profit target because of substantial costs for repairing defects in a new line of trams.

Net income in the company's fiscal second quarter rose to €1.21bn to 31 March from €568m for the same period the previous year. The group's profit included a pretax gain of €590m from the sale of Infineon shares.

Despite difficulties in its transportation division, the company remains committed to its full-year targets, including a 10% increase in growth, "even if they will be harder to reach", said Siemens chief executive officer Heinrich von Pierer.

Second-quarter sales dipped 2% to €17.8bn from €18.2bn a year earlier.

Sales at Siemens' Information and Communication Networks division, which supplies equipment to network operators and enterprises, slipped 4% to €1.62bn in the second quarter, from €1.68bn a year earlier.

The division's profit, however, rose to €37m from a loss of €147m the year before, reflecting the positive impact of restructuring efforts.

Sales at the group's Information and Communication Mobile division, which manufacturers mobile phones and network equipment, rose 14% to €2.7bn from €2.3bn a year earlier. The division's profit rose 98% to €109m from €55m.

Handset volume increased to 12.8 million units from eight million in the same period a year earlier. Prices remained stable compared to the first quarter of the fiscal year (the seasonally strong Christmas period), when handset volume was 15.2 million.

Siemens' mobile division has secured nearly 30 orders for third-generation network equipment, making it one of the leading suppliers of the new mobile internet technology. "Even if there has been some delay with handsets and general scepticism about the service, we are convinced that 3G will be a success," said Von Pierer.

Sales at Siemens' IT consulting unit, Siemens Business Services, dropped 16% to €1.1bn in the second quarter from €1.3bn the year before. Von Pierer admitted the market for IT outsourcing services remains "tough". 

Siemens is studying expansion opportunities in China and, in particular, Japan, following the government's move to allow more foreign investment into the country.

Group investment in research and development was 7.1% of sales.

At the end of March, Siemens employed 415,000 people worldwide, compared with 417,000 at the end of 30 September. Of these, 167,000 were employed in Germany at the end March, compared with 170,000 at the end of September. The company has cut some 35,000 jobs over the past three years.

John Blau writes for IDG News Office

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