UPDATE 2-Siemens casts doubt on targets, warns of slow growth

* Q3 oper profit down 21 pct, sales down 4 pct

* New orders down 28 pct, lagging expectations

* CEO says economy stabilising at low levels

* Shares down 1.75 pct, underperforming blue chip index

(Recast, adds CEO comments, share price)

by Marilyn Gerlach and Jens Hack

MUNICH, July 30 (Reuters) - Industrial conglomerate Siemens (SIEGn.DE), a bellwether of Germany's economy, cast doubt on its key performance targets and said it was preparing for a long period of slow growth in its most developed markets.

Speaking after Siemens reported mixed third-quarter results, Chief Executive Peter Loescher told reporters that data suggested global economic activity was stabilising at a low level, and that the company's margin targets for 2010 had not taken into account the impact of the financial crisis.

"In the industrialised countries, we will have to adjust to an extended phase of below-average growth," he told journalists, adding that the company will work on increasing sales in emerging economies.

"We will have to see at the end of (2009) how many divisions will achieve these (targets) compared to our original plans for end-2010," he said.

Loescher referred to the same year-end strategic review, due to be disclosed on Dec 3., when asked about possible additional job cuts, adding that Siemens was "committed to a corporate policy of looking at the long-term view".

One analyst who declined to be named has said he expects two out of the company's three sectors as well as eight of 14 divisions would miss their 2010 margin targets.

Siemens' profit margin targets, set in 2005 and refined in January 2008 as benchmarks to catch up with industry peers, are 9-13 percent for its industry sector, 11-15 percent for energy and 14-17 pct for healthcare. The industry sector -- the bread-and-butter of the engineering conglomerate -- has been the worst hit of the three as demand fell for a range of products covering everything from electronic drive systems and control machinery on factory assembly lines, amusement rides and lighting fixtures.

A Reuters poll of analysts showed the consensus for 2010 margins was 7.5 percent for Industry, 10.3 percent for Energy and 12.3 percent for Healthcare. [ID:L026748]

General Electric (GE.N), a Siemens rival that reported quarterly profit that topped Wall Street's expectations, had a larger-than-expected 17 percent drop in revenue and is weighing another $2 billion in restructuring programmes after having spent $5 billion on restructuring since 2007. [ID:n17480588]

Siemens shares were down 1.75 percent at 56.06 euros at 1159 GMTT, while Germany's blue chip index .GDAXI was up 0.6 percent.

Q3 PROFIT BEATS ESTIMATES

Siemens earlier said operating profit in the quarter to end-June fell 21 percent, beating market forecasts, but new orders fell by a worse-than-expected 28 percent to 17.16 billion euros.

CEO Loescher said the macroeconomic environment had "clearly left" a mark on Siemens' new business, but the company had prepared for that ahead of time.

In July last year, Siemens launched a 1.2 billion euro cost savings programme over a two-year period to 2010. It entailed 17,000 job cuts worldwide.

Analysts have forecast business in the company's year to September 2010 would be more difficult than the current year and predicted production capacity would have to be slashed permanently.

Siemens has so far responded to the downturn by reducing working hours of one out of seven staff in Germany, accelerating cost cuts and buying more materials from low-cost countries.

Analysts said Siemens needed to slash capacities and launch further cost cuts because despite signs of a trough, it would take time before volumes returned to peak levels of 2007/2008.

Germany's engineering industry association VDMA said on Thursday the sector remains in a slump despite some recent positive industry data. [ID:nLU072004]

Siemens trades 11.5 times its forward 12-months earnings, a tad lower than GE's 12.1 and a hefty discount to ABB's 17.6, according to StarMine.

(editing by John Stonestreet)