Clipped From The Guardian
Profits and more jobs put at risk in Siemens Nicholas Bannister, Technology Editor, in Munich SIEMENS, Europe's largest electrical group and a bellwether of the German economy, yesterday warned of falling profits and further job cuts after announcing a slowdown in profits growth during the first quarter. The chief executive, Dr Hein-rich von Pierer, said the current financial year would be "characterised by slower growth as a result of the most difficult business environment" and it would be hard to maintain full-year profits. First-quarter net income rose 2 per cent to DM406 million (166 million), compared with the 8 per cent upturn for the whole of 199192. While sales for the first quarter were up 4 per cent, the value of new orders fell sharply, down 8 per cent to DM18.6 billion. Dr von Pierer said that more than 10,000 jobs would go this year, bringing the workforce to below 400.000. The biggest cuts would be in the group's two big problem areas, the Siemens Nixdorf computers business and the semi-conductor operations, both of which continued to incur heavy losses. He said that while orders for the current year might rise by 1 to 2 per cent to about DM87 billion and sales should show stronger growth to about DM84 billion, profits were likely to be affected. "We are prepared for leaner times following live consecutive years of growth in net income. We will have to make major efforts to maintain the level of net income reached last year. Siemens is heavily dependent upon the German market, which accounts for 43 per cent of its turnover, and upon interest and other financial transactions which make up almost half its pre-tax profit. The losses on the computer and semi-conductor side have been accompanied by a downturn in the group's general electrical engineering businesses as the global recession has cut demand for factory automation systems and equipment for the building industry. However. Siemcns's infrastructure-related operations, including its big telecommunications and rail transportation divisions, have held up well, partly as a result of continued demand from eastern Europe. Dr von Pierer dismissed claims that the German economy was "on the brink of catastrophe".