Siemens showed substantial growth in Operations in the third quarter of fiscal 2007 and boosted Group profit 22% to €1.504 billion, the company announced on July 25, 2007. Every Group in Operations increased its profit year-over-year. Net income jumped 54% to €2.065 billion. Siemens also grew revenue and new orders: Revenue rose 8% to €20.176 billion and orders climbed 13% to €22.147 billion.
With the release of its quarterly figures, Siemens also announced the sale of its automobile supplier business Siemens VDO Automotive to Continental AG for €11.4 billion as well as the planned acquisition of the medical diagnostics company Dade Behring, Inc., based in the U.S., by the Medical Solutions Group for approx. US$7.0 billion (approx. €5 billion).
"Siemens’ third quarter demonstrates that the company is on track, and we are off to a good start
on our Fit for 2010 program," said Peter Löscher, who joined Siemens as CEO at the beginning of
the fourth quarter. "This program includes ambitious new targets for profitability, cash, and return
on capital employed as well as leadership in corporate responsibility.
In the third quarter, ended June 30, 2007, Siemens’ net income rose to €2.065 billion, an increase
of 54% compared to €1.344 billion in the third quarter a year earlier. Basic earnings per share rose
to €2.25 from €1.45 in the prior-year quarter, and diluted earnings per share increased to €2.18
from €1.11 a year earlier. Group profit from Operations for the quarter climbed 22% year-over-year
to €1.504 billion despite negative equity investment income of €371 million related to Nokia
Siemens Networks (NSN).
Most Groups delivered strong double-digit profit growth. Leading earnings contributors included Automation and Drives (A&D), Medical Solutions (Med), Power Generation (PG), Siemens VDO Automotive (SV), Power Transmission and Distribution (PTD), and Osram. The profit margins at a majority of the Groups are within the new margin ranges established at the start of the Fit for 2010 program in April of this year.
Research and development (R&D) expense rose to €995 million from €848 million in the third quarter a year earlier, primarily at A&D and Med which made acquisitions between the periods under review. R&D as a percent of sales rose to 4.9% from 4.5% a year earlier.
In a favorable macroeconomic environment, third-quarter orders increased 13%, to €22.147 billion,
and revenue of €20.176 billion was up 8% compared to the prior-year quarter. Excluding currency
translation and portfolio effects, third-quarter orders rose 12% and revenue was up 7%. A majority
of Groups in Operations increased both orders and revenue year-over-year, with particularly strong
growth at A&D, Med, PTD and PG. On a regional basis, Asia-Pacific and Europe outside Germany
posted double-digit growth in both orders and revenue compared to the prior-year period.
Looking forward, Löscher noted: "In the fourth quarter, I will be concentrating on five areas:
compliance, leadership culture and organizational structure, business portfolio, high-growth
markets, and innovation. Ultimately, Siemens needs to get faster, less complex and more focused.
Today’s announcements regarding Siemens VDO Automotive and Medical Solutions are important
steps in that direction."
Focused further development of the business portfolio
Siemens AG has signed an agreement with Continental AG, Hanover, Germany, to sell its entire
stake in Siemens VDO Automotive AG (SV). The price is €11.4 billion. The closing of the
transaction is subject to approval by the responsible antitrust authorities and other closing
conditions and is expected in the current calendar year. Preparations for the planned IPO of SV will
be terminated. The sale of SV supports the goals set in the company’s Fit for 2010 program. These
goals include a focused further development of the business portfolio in the three application fields
of Energy and Environmental Care, Automation and Control/Industrial and Public Infrastructures,
and Healthcare.
Siemens aims to further expand the application field of Healthcare through the planned takeover of
Dade Behring, Inc., headquartered in Deerfield, Illinois/USA. The company intends to buy all
available shares of Dade Behring and is making Dade Behring shareholders an offer of US$77 in
cash per share. The planned acquisition has a transaction volume of roughly US$7 billion (ca. €5
billion). Closing is expected in the second quarter of fiscal 2008. Completion of the merger is
subject to receipt of customary, regulatory approvals and other customary closing conditions. This
deal, together with the acquisitions of Diagnostic Products Corporation and Bayer Diagnostics in
fiscal 2006, puts Siemens in a position to become No. 1 in the field of laboratory diagnostics.
