Siemens: Key figures Q1, Shareholders Meeting 2007
- Siemens increases Group profit from Operations 51% in first quarter
- Sales grow 6% and orders increase 4% compared to strong prior-year quarter
- Kleinfeld at Annual Shareholders’ Meeting: “Siemens to be role model for transparency and controls.”
München, Germany – In the first quarter of fiscal 2007, Siemens achieved a substantial increase in earnings from Operations, with Group profit from Operations soaring 51% to €1.631 billion. All Groups in Operations were in the black, and the majority of the Groups posted both higher profits and higher profit margins year-over-year. Net income, which was negatively impacted by a penalty of €423 million imposed by the EU Commission, totaled €788 million, compared to €939 million in the same quarter a year ago.
Sales in the first quarter climbed 6% year-over-year to €19.068 billion, while orders rose 4% to €24.582 billion. Revenue growth was balanced regionally, while order growth was concentrated in the Americas, the Middle East and Europe including Germany. In Germany, sales increased 2% to €3.900 billion, and orders grew 6% to €4.871 billion.
“In terms of the underlying strength of our business, the first quarter got the fiscal year off to a strong start,” said Siemens CEO Klaus Kleinfeld. “Order growth was particularly satisfying, considering that the prior-year basis of comparison was already quite high. We also brought more of our revenue growth to the bottom line, with a substantial increase in Group profit from Operations. While it is disappointing to see our net income growth reversed by an impact from events in the past, we are moving on with our operations tremendously improved year-over-year. This shows that Fit4More is delivering a more profitable and growth-oriented portfolio for Siemens, and we are continuing in that direction by closing the deals we announced last year and initiating new ones. We look forward to maintaining this momentum.”
Fit4More is generating sustainable, profitable growth
At the Annual Shareholders’ Meeting, Kleinfeld underscored the success of the Fit4More Program that he unveiled a year ago. The program’s goal – to achieve sustainable, profitable growth – has made a reorientation of the Information and Communications (I&C) business area unavoidable, he noted. At the same time, Siemens has also made a massive investment in growth with a large number of acquisitions and increased R&D outlays. “This two-pronged strategy, which is the foundation of all our actions, has now taken solid hold,” said Kleinfeld. The milestones for restructuring I&C include a strategic reorientation of the carrier business in the planned 50-50 joint venture Nokia Siemens Networks. Kleinfeld confirmed that Siemens still expects to close the deal in the current quarter. In the enterprise business, Siemens is working continuously to improve operations and at the same time is open for strategic partnerships. The establishment of the new Group Siemens IT Solutions & Services completes the reorientation of SBS. R&D investments, which increased to €5.7 billion in fiscal 2006, as well as a large number of strategic acquisitions over the last 20 months in the growth areas energy, healthcare and automation, reflect Siemens’ massive growth and investment strategy.
Kleinfeld stresses no tolerance for illegal business practices
Referring to current allegations of corruption, Kleinfeld assured investors at today’s Annual Shareholders’ Meeting once again that Siemens absolutely will not tolerate illegal or irregular business practices of any kind. The Managing Board is doing everything in its power, he said, to ensure that the matter is fully and completely cleared up. Key measures include the independent and thorough investigation which has already been launched by the international law firm Debevoise & Plimpton retained by the Audit Committee of the Supervisory Board; the retention of the internationally recognized expert Michael J. Hershman as compliance consultant; and the hiring of the experienced public prosecutor Daniel Noa as the company’s Chief Compliance Officer. These moves will lay the basis for improving internal compliance and control systems. “We want to become a company that is an international worldwide benchmark for high standards of transparency and control,” said Kleinfeld.
Pierer: We must be a model in ethical business conduct
“Siemens must become a role model for ethical business conduct,” explained Supervisory Board Chairman Heinrich v. Pierer. He stressed that he had assured his full support to all those involved with clarifying the charges. In order to avoid even the slightest appearance of a conflict of interest, he took the initiative to declare that he will no longer participate in the meetings of the Audit Committee at which investigation and compliance matters are discussed. In agreement with Gerhard Cromme, Chairman of the Audit Committee, and the law firm Debevoise, retained by the Audit Committee, this practice was already in effect for yesterday’s meeting. During his period as CEO, Pierer noted, he had already taken major steps to combat corruption, including establishing the Business Conduct Guidelines and a worldwide compliance system. “I am deeply distressed that these efforts were not successful enough.”
Cromme: Good reputation of Siemens will be restored
“I am confident that the trust in Siemens and the company’s good reputation will be restored,” declared Gerhard Cromme, Chairman of the Audit Committee in the Supervisory Board. “Responsibility for adhering to the compliance regulations lies in the hands of the Managing Board, and the Audit Committee monitors the Managing Board in this context,” emphasized Cromme further. The results of the thorough and independent investigation will therefore be reported directly to the Audit Committee and not to the Managing Board. The investigation by Debevoise will also look at the quality and the quantity of information provided to the Audit Committee by the company management. “Our goal is to have a system that will prevent and detect unethical and illegal conduct and that will serve as a benchmark for other companies,” explained Cromme.
Siemens (Berlin and Munich) is a global powerhouse in electrical engineering and electronics. The company has around 475,000 employees (incl. discontinued operations) working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of services for individual requirements. Siemens provides innovative technologies and comprehensive know-how to benefit customers in over 190 countries. Founded more than 155 years ago, the company focuses on the areas of Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In fiscal 2006 (ended September 30), Siemens had sales of €87.3 billion and net income of €3.033 billion, according to U.S. GAAP. Further information is available on the Internet at: www.siemens.com
This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words as “expects”, ”looks forward to”, “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from: changes in general economic and business conditions (including margin developments in major business areas); the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; changes in currency exchange rates and interest rates; introduction of competing products or technologies by other companies; lack of acceptance of new products or services by customers targeted by Siemens worldwide; changes in business strategy; the outcome of investigations and legal proceedings as well as various other factors. More detailed information about certain of these factors is contained in Siemens’ filings with the SEC, which are available on the Siemens website www.siemens.com and on the SEC’s website www.sec.gov Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed sought, estimated or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.
The press release ’Siemens in the first quarter 2007 (October 1, 2006 to December 31, 2006)’ and the financial report ’first quarter 2007’ can be found at www.siemens.com