The Hindu Business Line : Siemens net dips 27% on higher costs

Mumbai, Nov. 25 Industry and infrastructure solutions provider Siemens Ltd on Tuesday reported a nearly 27 per cent drop in standalone net profit for the quarter ended September 30 at Rs 225.19 crore, against Rs 308.62 crore logged in the year-ago period.

The fall in profits was mostly on account of higher expenses during the quarter and an exceptional income of Rs 52.40 crore in the corresponding quarter of last fiscal, related to profit on sale of its automotive segment.

During the quarter, the company notched up net sales of Rs 2,421.61 crore (Rs 2188.45 crore), up by about 11 per cent.

For the whole accounting year of the company that ended on September 30 (2008), its net profit was almost flat at Rs 593.32 (Rs 596.54 crore) mainly due to additional cost impact in certain large projects. Sales turnover during the year was Rs 8,295.54 crore (Rs 7,726.80 crore), up by about 7 per cent.

Quality over quantity

Dr Armin Bruck, Managing Director, told presspersons “The base business of the company grew strongly. We focussed on quality of our results and healthy orders, instead of running for volumes.”

He added that the impact on profitability was due to the provisions booked to cover the cost overrun on certain large projects.

The key drivers for the company were the power, industrial solutions and automation businesses. It received new orders valued at Rs 8,718 crore for the whole year (Rs 10,109 crore), registering a drop of 14 per cent.

Dr Bruck said the Indian economy had witnessed phenomenal growth for the past few years and “it is only natural for the economy to go through a phase of correction”.

“We believe that it is just a transient phase and we are optimistic that the economy will gain momentum again on the basis of its inherent strengths.

We have geared ourselves for the period ahead by streamlining our businesses and processes, which will support our growth targets,” he said, adding that Siemens in India will be leveraged for regional and global markets as a sourcing base of products and services.

The company has committed to a capital investment of Rs 200 crore for the current year (October 2008 to September 2009), almost at the same level as the last year. However, the company has an open mind on whether to put on hold some investments, depending on financial market conditions.

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Siemens net dips 27% on higher costs