Siemens AG (SI) reported fourth quarter of 2009 results which reflected charges of €1.63 billion on its stake in Nokia Siemens Networks (NSN). Income from continuing operations was a negative €982 million compared to a negative €1.259 billion in the fourth quarter a year earlier, and EPS was a negative €1.21 compared to a negative €1.51. This was below Zacks Consensus Estimate of a positive earning $1.40 per ADR.
Fourth-quarter orders came in 16% below the same period a year earlier, while conversion of Siemens’ strong order backlog held the decline in fourth quarter revenue to 9%. A book-to-bill ratio of 0.95 and currency translation effects took the order backlog to €81.2 billion at the end of the quarter. Revenue of €19.714 billion was down 9% com-pared to the prior-year quarter, despite stable revenue in Energy and Healthcare.
Revenue came in lower in all regions, again due primarily to Industry. On a geographic basis, the sharpest declines came in the region comprising Europe, the Common Wealth of Independent States, Africa and the Middle East (Europe/CAME) and in the Americas. Siemens expects market conditions to remain challenging in coming quarters.
Total Sectors profit in the fourth quarter increased to €1.923 billion from €1.533 billion a year earlier, on sharply higher profits in the Energy and Healthcare Sectors. The Industry Sector absorbed a volume-driven decline in profit due to the economic downturn, and also took net charges of €173 million for severance. For comparison, Total Sectors profit in the prior-year period was burdened by even higher charges related to previously disclosed transformation costs, totaling €151 million in Industry and €174 million in Healthcare.
Free cash flow from continuing operations was €3.158 billion, up 13% from the strong prior-year quarter.
The under funding of Siemens’ principal pension plans as of Sep 30, 2009 amounted to €4.0 billion compared to €5.0 billion as of Jun 30, 2009.
Siemens AG, an electronics and electrical engineering company, operates in the industry, energy, and healthcare sectors worldwide. In the industry sector, the company’s portfolio ranges from industry automation and drives products and services to building, lighting, and mobility solutions and services, as well as includes system integration and solutions for plant business. It offers automation and drives, industrial solutions and services, transportation systems, Siemens building technologies, and OSRAM lighting solutions. Major competitors are ABB Ltd (ABB) and General Electric Company (GE).
We currently have a Neutral recommendation on SI.
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