Siemens Reports a Decline in Profits, Citing Europe’s Debt Crisis

Profit in the last three months of 2011, which is Siemens’s fiscal first quarter, fell to 1.5 billion euros ($1.95 billion), a drop of 17 percent compared to a year earlier. Sales rose 2 percent to 17.9 billion euros. But new orders declined 5 percent to 19.8 billion euros, which 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 expected a recovery in the second half of the year but added, “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, because of large exporters like Siemens that have profited from business in China and other countries where growth remains strong.

But the latest earnings report suggested that business from some emerging markets could be slowing. That would be a bad sign for Siemens and 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 over all. Orders from the United States rose 6 percent, the company said.

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

A survey of purchasing managers released Tuesday 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