* Siemens now sees annual profit at lower end of range
* Says now sees moderate decline in revenue
* Q2 revenue falls 7 pct, new orders jump 20 pct
* Q2 profit flat vs yr earlier, misses consensus
* Shares up 1.1 pct
By Maria Sheahan
FRANKFURT, May 2 German industrial bellwether
Siemens AG lowered its profit outlook for this year
due to weak demand from industry and delays in delivering high
speed trains and connecting offshore wind farms.
Siemens also stepped up cost cutting efforts to cope with
the global economic slowdown, although it said four big deals
had pushed orders back to growth after six quarters of declines.
The engineering group, whose products range from gas
turbines to hearing aids, said it now expected net profit from
continuing operations to reach the lower end of its outlook
range of between 4.5 billion euros ($5.9 billion) and 5 billion
in the current year.
Analysts in a Reuters poll had on average seen profit for
the group's financial year through September declining to 4.8
billion euros from 5.2 billion last year, partly because of a 1
billion hit from its cost-cutting programme.
In its fiscal second quarter, profit stagnated and revenue
fell for the first time in two years on weak demand for
industrial products such as automation and drive technologies as
well as fewer sales of power plants.
Orders jumped 20 percent to 21.45 billion euros, beating
consensus thanks to four major European orders for trains and
wind farms. Orders in Siemens' bread-and-butter industry
business were down by 11 percent.
"The figures confirm the impression we have of the sector so
far this quarter. The market environment is tougher than
companies had expected, forcing them to adjust their outlook,"
LBBW analyst Thomas Klee said.
Last month, General Electric warned of slowing profit
growth in its industrial businesses, and Swiss industrial group
ABB has said it would step up cost-cutting measures
following a weaker than expected first quarter.
Siemens has put on the back burner a plan to increase annual
sales by about a third to 100 billion euros and late last year
launched a push to save 6 billion euros over two years.
It said on Thursday it was raising that target to 6.3
billion euros to make up for a weaker than expected 2013.
"The first half was not so bad in terms of our productivity
measures, but unfortunately they are being wiped out by project
charges and weakness in the short-cycle business," finance chief
Joe Kaeser told analysts.
Manufacturing studies published last month had already
fanned concern that the global economy is losing steam, as
growth in Chinese factories slowed to a crawl, reflecting weak
demand from a fragile U.S. economy and a euro zone mired in
Siemens said it did not see industrial demand in China
recovering before its fiscal fourth quarter but expected to
benefit from the Asian economy's expansion into high-end
manufacturing next year.
"There is reason to believe that this economy will make
inroads into aerospace and automotive," CFO Kaeser told
analysts, adding that systems and software to increase
efficiency in factories, a major business for Siemens, would be
a key area.
Siemens' quarterly results were weighed down by 161 million
euros of charges related to delayed high-speed train orders,
which it blamed on German red tape. Lesser charges stemmed from
delays in connecting wind farms to mainland power grids.
Siemens aims to push up the margin on its core operating
profit to at least 12 percent from 9.5 percent last year by
cutting costs and focusing on its most profitable businesses.
Among others, it plans to sell its water treatment business,
postal automation and baggage handling and solar business.
By comparison, GE posted an operating margin of 15.1 percent
last year and aims to further boost profitability this year.
ABB, a major competitor to Siemens in power systems and industry
automation, had a margin of 15.0 percent in its fiscal first
In its second quarter through March, Siemens saw its margin
shrink to 7.5 percent from 9.9 percent as demand faded for
higher-margin industry automation and drive-technology products.