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Siemens beats forecasts
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January 24, 2000: 7:31 a.m. ET
German technology giant says 1Q earnings doubled, boosting shares
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LONDON (CNNfn) - German industrial and electronics giant Siemens posted a near-doubling in first-quarter profits Monday, exceeding expectations, and raised its earnings forecasts for the current fiscal year. Its shares leapt almost 5 percent.
The Munich-based company said it anticipates stronger growth rates for sales and orders in the year ending Sept. 31 - "possibly in the double-digit range" - although it didn't put specific numbers on its earnings expectations.
Siemens, whose products range from computer chips to high-speed trains and mobile phones, said pre-tax profits surged 91 percent to 625 million euros ($628 million) in the three months to the end of December, fueled by sharply improved performances in information and communications, medical engineering and lighting.
Analysts cited by Reuters had forecast net income of 455 million euros.
Siemens shares (FSIE) were up 4.6 percent at 143.28 euros in Frankfurt at midday Monday, having initially shot up nearly 5 percent to a record 143.79 euros on the results.
Swantze Conrad, an analyst at J.P. Morgan in London, said investors were responding to the strong performance across the companies' various sectors.
"Once again, we are expecting to raise our earnings estimates by quite a bit," Conrad said.
Sales at Infineon, the semiconductor unit slated for an expected flotation in March, soared more than 70 percent for the quarter, buoyed by rising demand for memory chips and a successful conversion from 16-megabit to 64-megabit chips. Infineon swung to a profit of 245 million euros before tax and interest payments, from a loss of 100 million euros in the year-earlier period.
Siemens said it booked one-time profit of 974 million euros in the first quarter, including proceeds from the flotation of electronic-components manufacturer, Epcos.
First-quarter orders climbed 15 percent, while sales rose 12 percent to 16.4 billion euros. Predicting strong growth in both sales and orders for the rest of the current fiscal year, the company warned that the rapid gains in profit reported in the 1998-1999 year meant that earnings for the coming quarters may increase more slowly than in the first three months.
Siemens has embarked on an extensive restructuring program over the past 18 months, spinning off a number of non-core units. The company said all divisions were now in the black.
Siemens said business volume in the quarter was especially strong in the United states, where orders surged 43 percent to 3.9 billion euros, and sales leapt 32 percent to 3.4 billion euros. By contrast, sales in Asia rose 12 percent to 1.8 billion euros, though orders rocketed 61 percent, helped by continued economic recovery in the region, the company said.
In Europe outside Germany, sales and orders both rose 19 percent. 
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Siemens
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