Europe Debt Crisis Weighs on Siemens

Profit in the last three months of 2011, which is Siemens’ fiscal first quarter, fell 17 percent to €1.5 billion, or about $1.95 billion, compared to a year earlier. Sales rose 2 percent to €17.9 billion, but a 5 percent decline in new orders, to €19.8 billion, augured poorly for future quarters.

“The uncertainties of the ongoing debt crisis have left their mark on the real economy,” Peter Löscher, the chief executive of Siemens, said in a statement. He said he expects a recovery in the second half of the year but “we must work hard to achieve our goals.”

The company, based in Munich, reported lower profit in all its major business areas, including a 36 percent decline in its energy unit, which Siemens attributed to delays in major power transmission projects and a loss in the division that makes wind turbines. The energy unit is the largest part of the company by sales.

The German economy has so far weathered the European debt crisis relatively unscathed, thanks to large exporters like Siemens that have profited from business in China and other countries where growth remains strong.

But the figures released Tuesday suggested that business from some emerging markets could be slowing. That would be a bad sign not only for Siemens but for other makers of industrial products which, along with automobiles, account for most of German exports.

Orders from Asia and Australia declined 9 percent in the quarter, Siemens said, and 3 percent for emerging markets overall. Orders from the United States rose 6 percent, the company said.

However, there were also other signs Tuesday that the looming slowdown in the European economy, and especially Germany, may not be as bad as feared.

A survey of purchasing managers by the data provider Markit Economics showed an unexpected rise in services and manufacturing output in January, led by Germany. Analysts had expected a decline.

The data “adds to tentative evidence suggesting that the downturn in the euro zone may be bottoming out,” the Dutch bank ING said in a note to clients. But the analysts added, “the underlying economic situation remains very fragile.”

Article source: http://www.nytimes.com/2012/01/25/business/global/europe-debt-crisis-weighs-on-siemens.html?partner=rss&emc=rss