BERLIN (dpa-AFX) - German engineering company Siemens AG (SI) Tuesday said it expects slight increase in third-quarter net income from continuing operations, after adjusting for a payment to the nuclear technology joint venture Areva NP following a legal decision. However, the company expects 'clear increase' in revenues, with significant rise in new orders, driven by the major ICx order. Earlier in the day, Siemens said it plans to expand its market share in emerging markets, citing 'enormous' demand for its solutions in such regions.
For the third quarter, net income from continuing operations would increase slightly from prior year's around 1.4 billion euros. This is adjusted for 648 million euros plus interest paid to Areva NP after a decision by an arbitral tribunal of the International Chamber of Commerce in May, regarding the modalities of Siemens' withdrawal from the JV.
Revenue will probably exceed the prior-year figure of 17.4 billion euros, while it will stabilize at the sequential quarter's level of about 17.7 billion euros, the company noted.
New orders are expected to significantly exceed the level of about 19.2 billion euros a year ago, and about 20.7 billion euros reached in the preceding second quarter. In May, the company booked an order for ICx long-distance trains, with a volume of roughly 3.7 billion euros.
According to the company, the anticipated growth would be supported primarily by the industry and energy sectors.
Siemens CFO Joe Kaeser noted that the company's growth expectations have come along in the third quarter, but it expects easing growth in the second half, mainly due to tougher comps year-over-year.
Regarding its planned expansion to emerging countries, Siemens noted that all divisions would grow faster than their markets in these countries over the next five years, primarily with the anticipated strong growth in products for entry-level segment.
Siemens is already marketing over 160 products in the entry-level segment, with another 90 getting ready to be launched.
Apart from Brazil, Russia, India and China (BRIC countries) and the Middle East, Siemens plans to drive growth in countries like Chile, Indonesia, Mexico, Colombia, Poland, South Africa, Thailand, Turkey and Vietnam.
Talking at the Capital Market Day in Shanghai, Siemens Managing Board member Roland Busch said, 'The emerging markets are still the growth engines of the global economy. With its strong local presence and the right products, Siemens is excellently positioned to capture an above-average share of the growth taking place in these markets.'
The company noted that the Chinese government's twelfth five-year plan primarily calls for massive investments in renewable energies, smart grids, electric mobility and improvements in the healthcare system, while an additional 200 gigawatts is required by India into its power grid by 2020. Further, Russia has announced investments of nearly 300 billion euros by 2030 to expand its rail network alone.
In the emerging markets, the company's revenue more than doubled to some 22 billion euros from fiscal 2005, representing an average annual growth rate of 17 percent. In 2010, the share in the emerging markets revenues was more than 30 percent, compared to about 20 percent in fiscal 2005.
Siemens' number of employees in such markets grew 84.8 percent from fiscal 2005, and the number of main production facilities increased to 117 from 64.
SI closed Monday's regular trading session at $132, up $0.82 or 0.63 percent.
Siemens is currently trading at 89.84 euros on Frankfurt's Xetra, down 2.95 euros or 3.18 percent.
Copyright RTT News/dpa-AFX
© 2011 AFX News
