Siemens new orders slide as crisis spooks customers
FRANKFURT/MUNICH (Reuters) - Siemens posted a 23 percent drop in quarterly new orders, steeper than expected, as customers wary of Europe's debt crisis increasingly refrained from making investments.
Europe's biggest engineering conglomerate said on Thursday order intake -- a barometer of future sales -- declined to 17.8 billion euros ($21.58 billion) in its fiscal third quarter, missing a 19.5 billion euro average estimate in a Reuters poll.
Profit at Siemens' Industry sector, usually the first of its businesses to suffer in an economic slump, declined 26 percent to 523 million euros, below the most pessimistic analyst and missing consensus of 619 million euros.
The Industry sector -- the bread and butter of Siemens -- has been the worst-hit of its four segments as demand declines for a range of products ranging from electric drive systems as well as control machinery for factory assembly lines and amusement park rides.
Business activity in the 17 euro zone states, Siemens biggest market, shrank for a sixth straight month in July, with output in Germany's manufacturing sector contracting at its fastest pace in over three years and business sentiment dropping for the third month in a row in July.
Swiss rival ABB (ABBN.VX) earlier on Thursday said positive developments in China and the strength in the United States helped it grow more positive about the future, even as it missed expectations with its second quarter profit due to exchange rate fluctuations.
Siemens said core operating profit of its four main businesses - Industry, Energy, Healthcare and Infrastructure - jumped 59 percent to 1.82 billion euros, mainly due to the absence of huge one-offs that depressed earnings last year.
The Munich-based maker of products ranging from fast trains and windmills to lightbulbs and hearing aids also profited from a fat backlog of orders for gas and steam turbines as well as other late-cycle businesses, which take a year to feel the effects of economic swings.
Despite a weakening trend in early-cycle businesses, Siemens confirmed its full year target for net income from continuing operations, which it had slashed in April to 5.2-5.4 billion euros from a previous guidance of at least 6 billion.
Analysts on average have seen Siemens hitting only the lower end of the corridor, if not miss it altogether.
"Given the deteriorating environment it becomes more difficult to achieve our guidance for the fiscal year," CEO Peter Loescher said.
Siemens also cancelled plans to float its lighting unit Osram and announced it now planned to spin it off instead.
General Electric (GE.N), a Siemens rival whose quarterly profit topped Wall Street's expectations on Friday, posted a lower-than-expected rise in revenues because of weakness in Europe, though U.S. demand boosted earnings.
According to ThomsonReuters StarMine, which weights analysts' estimates based on their track record, Siemens trades at 9.8 times its estimated 12-month forward earnings, at a discount to ABB and GE, which trade at multiples of 10.6 and 12.1, respectively.
($1 = 0.8248 euros)
(Reporting By Marilyn Gerlach and Jens Hack)
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