Siemens turns profit in fourth quarter

Siemens AG posted Wednesday a fourth-quarter profit on lower sales, forecasting a declining business volume for the coming year.

The Munich-based electronics giant reported net income of 53 million euros (CDN$84.13 million) as of Sept. 30, the end of the period being reported, compared with a loss of 1.1 billion euros for the same period a year ago, the company said in a statement. Sales fell to 21.3 billion euros from 24.5 billion euros.

Net income in its 2002 fiscal year, ending Sept. 30, rose 24 per cent to 2.6 billion euros from 2.1 billion euros the year before. During the same period, sales decreased 3 per cent to 84 billion euros.

In fiscal year 2002, earnings from operations before interest and taxes (EBIT) rose to 2.5 billion euros from 1.3 billion euros the year before.

In a telephone conference, Siemens Chief Executive Officer Heinrich von Pierer referred to the 2002 fiscal results as the “second best” in the company’s history, adding that the business year was also one of the more challenging due to global economic conditions. “In sum, we can say we are generally satisfied with the results,” he said.

The group’s Information and Communication Networks (ICN) division, however, continued to wrack up losses in the 2002 fiscal year. For the year, sales fell 25 per cent to 9.6 billion euros, while orders plunged 31 per cent to 8.7 billion euros. The unit posted a negative EBIT of 691 million euros, compared to 861 million euros a year ago.

“We are undertaking steps to turn around this unit by the fourth quarter of 2003,” von Pierer said. One of the measures, he said, will be to reduce the workforce.

In particular, the dramatic slump in sales to carriers hurt ICN, which manufactures networking equipment for both operators and enterprises. “A lot has appeared in the press about the drop in our carrier business,” von Pierer said. “Let me put this into perspective: Carrier sales account for only around 5 per cent of our total sales.”

Responding to speculation that Siemens was considering relocating to a country with a lower corporate tax base, Chief Financial Officer Heinz Neub