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Siemens tanks amid surprise profit warning

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Siemens tanks amid surprise profit warning
09:45 CET+01:00
German industrial giant Siemens issued a surprise profit warning on Monday, saying second quarter earnings would be cut by some €900 million ($1.4 billion dollars) after a review of major projects.

Shares in the company shed 10.94 percent to 71.34 euros in opening trades on the Frankfurt stock exchange, while the Dax index of leading shares plunged by 2.82 percent overall in a global stock market rout.

Simens said a weaker-than-expected performance in projects at its energy division, which builds power plants, its transport unit and a British contract for information technology services meant a hit to earnings in the three months to March.

Delays in a "large number" of turnkey projects in the fossil power generation operations had an adverse effect, Siemens said, adding it had also suffered "structural challenges in the supplier markets" and "delays recruiting experienced project engineers." The British IT customer was not identified.

Siemens said it expected the €900-million impact to be "the largest piece of any additional financial burdens for 2008." The German group also affirmed its 2010 financial targets, saying "definite progress toward these targets is expected in 2009."

The profit warning was a surprise for the conglomerate, which is active in diverse areas that include the construction of tramways, turbines and telecommunications equipment. Siemens had said in January that sales would increase this year by double the pace of the global economy.

Last month, Siemens said it would reorganize its corporate telecom unit as it prepared to get out of the business, eliminating 3,800 jobs while another 3,000 would be transferred to partners or other units - its biggest cuts in years.

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