German giants post feeble figures

Major German companies Siemens, Deutsche Telekom, and Commerzbank all reported poor third quarter figures on Thursday, confounding reports that the country's economy was weathering the global storm.

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Tech firm Siemens's net profit tumbled 27 percent in the 12 months to September "as we didn't fully succeed in significantly boosting our performance vis-a-vis competitors," chief executive Peter Löscher said.

In a bid to rectify this, Siemens planned to "reduce its costs by €6.0 billion, increase its competitiveness, and become faster and less bureaucratic," it said.

Siemens did not clarify exactly what the cost-cutting would entail, but "it will have an impact on the workforce even if I can't say much about that at this point," Löscher told a news conference, declining to say how many jobs would be on the line.

The reorganisation would include "both reinforcements through acquisitions as well as the divestment of businesses whose profits remain below company's expectations over a longer period," the company said.

Telekom upbeat despite losses

German telecoms giant Deutsche Telekom said that one-off charges connected to the merger of its T-Mobile USA unit pushed it into a heavy loss in the third quarter.

The group booked a bottom-line net loss of €6.9 billion in the period from July to September, compared with net profit of €1.069 billion a year earlier.

Nevertheless, underlying business was "extremely positive," and the group was therefore sticking to its full-year profit targets, the company said in a statement.

"Deutsche Telekom showed an extremely positive development in operations in the third quarter of 2012. On the other hand, a considerable book loss had to be reported following an accounting-relevant special factor," said chief executive René Obermann.

That was due to €7.4 billion in goodwill and asset writedowns on T-Mobile USA, which Deutsche Telekom has agreed in October to merge with MetroPCS. The German group will take a 74-percent stake in the combined entity.

Commerzbank comeback

Meanwhile, Germany's second-biggest bank Commerzbank said on Thursday it returned to profit in the third quarter of this year, but the result fell short of analysts' expectations.

Commerzbank said in a statement it booked a net profit of €78 million in the period from July to September, compared with a loss of €687 million 12 months ago.

Analysts polled by Dow Jones Newswires had been forecasting a bigger net profit of around €141 million.

Already late on Wednesday, Commerzbank had said it was unlikely to pay a dividend for either 2012 or 2013 given the difficult market environment.

The loss for the third quarter of 2011 had largely been due to writedowns on the bank's holdings of Greek sovereign bonds. Nevertheless, the market environment "will remain volatile in the coming months," said chief executive Martin Blessing.

"We are, therefore, continuing with our strict cost management, consistently reducing non-strategic portfolios further and strengthening our profitability," he said.

AFP/The Local/bk