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Siemens Reports Q4, FY05

Siemens reports revenues in its Communications group rose 2% to €3.71B during Q4 and profit was €53M, down from €286M

November 10, 2005

6 Min Read

MUNICH --

  • Orders rose 11% to €83.791 billion and sales of €75.445 billion were up 7%.

  • Income from continuing operations was €3.058 billion, level with income from continuing operations a year earlier excluding a net €403 million benefit from effects related to the sale of shares in Infineon Technologies AG and a goodwill impairment.

  • Net income was €2.248 billion, including a negative €810 million related to discontinued mobile devices operations. Net income of €3.405 billion in the prior year also included the €403 million net benefit.

  • Group profit from Operations was €4.687 billion, including significant charges in the I&C Groups and the industry logistics businesses formerly of L&A. Group profit from Operations a year earlier was €5.136 billion.

  • On a continuing basis, net cash from operating and investing activities was a negative €1.489 billion, including a significant increase in cash used for acquisitions and investments to €3.102 billion and €1.496 billion in supplemental cash contributions to Siemens pension plans. In the prior year, net cash from operating and investing activities was a positive €3.015 billion, including lower supplemental pension plan contributions of €1.255 billion more than offset by €1.794 billion in net proceeds from the Infineon share sale.

  • Siemens management proposes a dividend of €1.35 per share compared to €1.25 per share a year earlier.



"Fiscal 2005 was a very dynamic year for Siemens,” said Siemens CEO Klaus Kleinfeld in presenting preliminary results for the year. “We saw healthy growth, notably double-digit growth in orders, and many of our Groups produced strong profit performances. We also completed one of our busiest years of portfolio changes, gaining new strength in power, medical solutions and industrial automation. Furthermore, we took important steps with respect to our Information and Communications businesses. Overall, we delivered €3.1 billion in income from continuing operations, in line with our earlier guidance, despite significant charges."

"Looking forward, we will continue to rigorously execute on our Fit4More program with fiscal 2007 in view. We expect that the necessary strategic reorientation measures will affect, positively and negatively, our income and cash flow throughout fiscal 2006. We are on track in making Siemens fit for the future, including a further strengthening of our leadership in strategic markets."

For the fiscal year ended September 30, 2005, Siemens reported income from continuing operations of €3.058 billion, including a goodwill impairment. For comparison, income from continuing operations of €3.450 billion a year earlier included the €403 million net benefit mentioned above. Discontinued operations in fiscal 2005 were a negative €810 million due to divestment of Com’s mobile devices business. Net income, which includes discontinued operations, was €2.248 billion. More information on discontinued operations is included later in this release. Net income of €3.405 billion a year earlier includes the €403 million net benefit mentioned above. Basic and diluted earnings per share were €2.52 and €2.42, respectively, compared to €3.82 and €3.66 a year earlier. Based on income from continuing operations, basic and diluted earnings per share were €3.43 and €3.29, respectively, compared to €3.87 and €3.71 a year earlier.

Group profit from Operations was €4.687 billion compared to €5.136 billion a year earlier. Most Groups continued on track toward their fiscal 2007 earnings objectives, with particularly strong earnings coming from Automation and Drives (A&D), Medical Solutions (Med), Power Generation (PG), Siemens VDO Automotive (SV) and Osram. In contrast, Group profit at Communications (Com) was lower year-over-year. Siemens Business Services (SBS) posted a substantial loss, including €228 million in capacity adjustment charges and a fourth-quarter goodwill impairment of €262 million. In addition, Group profit from Operations in fiscal 2005 includes charges at the Distribution and Industry Logistics (DI) and Material Handling Products (MHP) divisions. These businesses are accounted for in Other Operations and the Logistics and Assembly Systems (L&A) Group is dissolved effective October 1, 2005. Along with Com and SBS, DI and MHP also expect further charges in coming quarters.

Orders for the year rose 11%, to €83.791 billion, and sales increased 7%, to €75.445 billion. Excluding currency translation effects and the net effect of acquisitions and dispositions, orders rose 7% and sales were up 3% year-over-year. Orders were higher at every Group in Operations, and sales also rose across the board except at Transportation Systems (TS). Sales growth was driven by international expansion, while orders climbed both domestically and internationally. Most major acquisitions for the year closed in the second half of the year, including CTI Molecular Imaging, Inc. (CTI), a nuclear medicine diagnostics company; Flender Holding GmbH, an industrial gear manufacturer; Robicon Corp., a maker of industrial voltage converters in the U.S.; and VA Technologie AG (VA Tech), a power and industrial solutions company.

On a continuing basis, net cash from operating and investing activities was a negative €1.489 billion in fiscal 2005. Net cash included a significant increase in cash used for acquisitions and investments to €3.102 billion and €1.496 billion in supplemental cash contributions to Siemens pension plans. For comparison, net cash provided by operating and investing activities of €3.015 billion a year earlier included lower supplemental cash pension contributions of €1.255 billion, more than offset by €1.794 billion in net proceeds from the Infineon share sales.

Siemens results for the fourth quarter of fiscal 2005Orders rose 16% compared to the fourth quarter a year earlier, to €23.596 billion, and sales climbed 13%, to €22.106 billion. Excluding currency effects and the net effect of acquisitions and dispositions, orders rose 9% and sales were up 4%. Group profit from Operations was €926 million, down from €1.474 billion a year earlier due largely to results at Com and SBS and also to asset impairments and project charges at DI and MHP. Income from continuing operations was €497 million compared to €736 million in the prior-year period. Based on income from continuing operations, basic and diluted earnings per share were €0.56 and €0.54, respectively, compared to €0.82 and €0.79 a year earlier. Fourth-quarter net income including discontinued operations was €77 million compared to €654 million a year earlier. Earnings per share for the fourth quarter were €0.09, compared to basic and diluted earnings per share of €0.73 and €0.70, respectively, a year earlier. On a continuing basis, net cash provided by operating and investing activities was €659 million in the fourth quarter. Investing activities used €2.285 billion, as a number of major acquisitions for the year closed in the fourth quarter. A year earlier, fourth-quarter net cash provided by operating and investing activities was €477 million, including €822 million used to acquire USFilter.

Operations in fiscal 2005

Information and Communications

Communications (Com)

Com closed the sale of its mobile devices business to BenQ Group (BenQ) of Taiwan in the fourth quarter. In the following discussion, discontinued mobile devices operations are excluded from both fiscal 2005 and fiscal 2004, in order to present a meaningful comparison of continuing operations over time.

Fiscal 2005 orders at Com rose 6%, to €13.802 billion, and sales increased 3%, to €13.141 billion. The Mobile Networks division accounted for much of Com’s growth for the year, and also made a strong earnings contribution. Group profit was €454 million for the year, down from €707 million a year earlier due predominantly to margin pressure in the enterprise business and severance charges, largely in the Fixed Networks division. The charges were offset by a gain of €208 million on the sale of a portion of Com’s shares in Juniper Networks, Inc.

Fourth-quarter Group profit was €53 million, down from €286 million a year earlier due to severance charges and market-driven margin pressures. Fourth-quarter sales of €3.707 billion were up 2% compared to the prior-year period, and fourth-quarter orders of €3.553 billion were 7% higher year-over-year.

Siemens AG

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