UPDATE 2-Siemens Q2 beats forecast, accelerates cost cuts

* Siemens to accelerate 1.2 bln-euro cost cutting - CEO

* CEO sees new savings via purchasing programme

* Cuts 2009 year profit outlook despite solid Q2

* Shares rise more than 5 percent

(Adds background, comments, share price)

By Marilyn Gerlach

BERLIN, April 29 (Reuters) - A robust energy business helped Siemens (SIEGn.DE) report better than expected second-quarter profits on Wednesday and the industrial conglomerate said it was advancing its cost-cutting as the world economy falters.

Its headline "sector" operating profit rose 43 percent to 1.84 billion euros ($2.43 billion) in the three months to March 31, helped by a comparatively weaker result last year when it booked a huge charge and this year's solid energy results.

Analysts in a Reuters poll had on average forecast a profit of 1.63 billion euros.

Siemens, which makes power plants to subway trains and hearing aids, also cut its forecast as expected for operating profit this year as orders at its industry division -- which generates nearly half of sales -- shrink.

Separately on Wednesday industry association the VDMA said German engineering orders fell 35 percent in March on a year ago, marking a slowdown in the pace at which demand is dropping, but offering no sign of a turnaround. [ID:nLT862204]

But Siemens chief executive Peter Loescher also said he now expects to have 1 bln euros of the 1.2 billion euros of savings targeted under a two-year cost-cutting programme in place after just one year, by the end of September 2009.

"We consider the results at the half-way point of our fiscal year quite satisfactory. But we know the direction this year is taking -- for everyone including us," Loescher told reporters.

"And this direction is marked by a sign that reads: 'decline in orders, revenue and profit'."

Siemens now expects operating profit to surpass 6.6 billion for its year to end-September, up from 6.52 billion last year.

Its previous target of 8.0-8.5 billion was set in July, when the world economy was forecast to grow 3 percent this year.

Commerzbank analyst Ingo-Martin Schachel hailed the strong sector profit -- which serves as operating profit for all three divisions.

"The new guidance for 2008/09 should also be positively received. As expected Siemens's new target is to exceed the previous year's 6.5 billion euros sector profit," Schachel said.

Siemens shares were up 5.3 percent at 50.11 euros by 1138 GMT, when the DAX index .GDAXI was up 0.8 percent.

ENERGY LEADS THE WAY

The Energy division -- which offers switch gear to nuclear power and green technology -- was the main driver of profit growth. Its operating profit swelled to 818 million euros from 6 million on a surge in demand for renewable energy and pressure to reduce carbon dioxide emissions.

Loescher told Reuters Television he expects new orders in energy to weaken in 2010, a year analysts said the recession will hit Siemens more than in 2009.

Its Industry business, which Loescher said will recover next year, was the main drag in January-March as industry automation, drive technologies and light bulb unit Osram felt the full force of deep output cuts by customers.

Like rivals General Electric (GE.N) and ABB ABB.VX, Siemens' energy and healthcare performed relatively well due to backlog orders booked two years ago.

Siemens' Healthcare division's operating profit rose 4 percent but analysts noted its computer tomography, magnetic resonance and other imaging systems are slowly feeling the economic pinch.

Chief Financial Officer Joe Kaeser said demand for healthcare is expected to be flat in fiscal 2010.

New orders at continuing operations in Siemens' second quarter -- keenly watched by investors for a glimpse of sales in 2010-2011 -- fell 11 percent to 20.86 billion euros.

GE has disclosed a 36 percent drop in net income while Alstom SA (ALSO.PA) confirmed its operating margin target of around 9 percent for 2009-2010.

ABB has said it was cutting costs by $2 billion by end-2010 while Schneider Electric (SCHN.PA) has aimed to boost supply chain productivity, generating savings of 600-800 million euros over three years.

Siemens shares trade at 9.5 times forward 12-months earnings, a discount compared with rivals' multiples such as GE's 11.6, Alstom's 10.9, Schneider Electric's 12.2, ABB's 13.7 and Philips Electronics' 25.6, according to Thomson Reuters Starmine, which weights analysts' forecasts according to their track record. ($1=.7683 euros) (Reporting by Marilyn Gerlach; Editing by Greg Mahlich)