Siemens cuts forecast as economic crisis hits

Siemens LogoBerlin - Europe's biggest engineering group global Siemens AG cut its profit forecast for the current fiscal year Wednesday as its order books shrank in the face of the global economic crisis. However, shares in the German-based company rose more than 4 per cent after it announced a jump in its second quarter profits with earnings from the same period last year hit by charges.

Siemens now expects operating profit from it core business in the current fiscal year which ends on September 30 to overshoot last year's 6.6 billion euros (8.68 billion dollars.)

However, the group said last year it hoped for an operating profit of 8 billion euros and 8.5 billion euros.

"What we are experiencing is not a normal economic downturn, but the steepest fall in the world economy since the crisis of 1929," Siemens's chief Peter Loescher releasing the results.

But he also said: "In the view of the deepening crisis in the world economy, we are satisfied with our second quarter results."

Indeed, second-quarter net profit jumped to 962 million euros from 384 million a year earlier with sales increasing 4.8 per cent to 18.95 billion euros following strong order growth in previous quarters.

Operating profit at Siemens' core sectors of energy, industry and healthcare in the quarter ended March 31 was up 43 per cent to 1.84 billion euros.

But the group said orders declined 11 per cent to 20.9 billion euros and Loscher warned the group's business conditions worsened over the last month.

Siemens shares were up 4.2 per cent at 49.95 euros in early Frankfurt trading Wednesday. (dpa)

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