“Results for the second quarter demonstrate that our Fit4More program is making a significant difference after just one year,” said Siemens CEO Klaus Kleinfeld. “Our evolving portfolio is positioning Siemens strongly in its growth markets, resulting in double-digit increases in sales and orders in the second quarter. We also earned higher profits at the majority of our operating Groups, and despite significantly higher charges at our I&C Groups we achieved an increase in net income as well.”
“Looking ahead, we anticipate that volume growth will even out somewhat compared to the rapid pace of the first half, and that severance programs already in place in the I&C Groups will result in further charges in the second half. Overall, we continue to focus all our efforts on achieving our 2007 targets.”
For the second quarter of fiscal 2006, ended March 31, 2006, Siemens reported net income of Euro 887 million, up 14% compared to Euro 781 million in the same period a year earlier. Basic and diluted earnings per share rose to Euro 1.00 and Euro 0.95, respectively, from Euro 0.88 and Euro 0.84 in the same quarter a year earlier. Discontinued operations lost Euro 14 million in the quarter, compared to a loss of Euro 79 million in the prior-year period. Income from continuing operations in the second quarter was Euro 901 million, and corresponding basic and diluted earnings per share were Euro 1.01 and Euro 0.97, respectively. A year earlier, income from continuing operations in the second quarter was Euro 860 million, and corresponding basic and diluted earnings per share were Euro 0.96 and Euro 0.92, respectively.
Group profit from Operations in the second quarter was Euro 1.325 billion, up 8% from Euro 1.225 billion in the same period a year earlier. Most Groups within Operations increased their earnings year-over-year, with major earnings contributions from Automation and Drives (A&D), Medical Solutions (Med), Siemens VDO Automotive (SV) and Osram. Severance charges at Communications (Com) and Siemens Business Services (SBS) totalled Euro 178 million, approximately double the level in the prior-year period.
Net income in the second quarter benefited from a gain on the sale of an investment and a positive effect related to the settlement of an arbitration proceeding, both within corporate items. In contrast, earnings from Financing and Real Estate activities in the second quarter declined to Euro 77 million from Euro 123 million in the prior-year period, which included a special dividend related to an investment.
Second-quarter orders of Euro 24.413 billion, including large orders at Power Generation (PG) and Transportation Systems (TS), were up 22% compared to the second quarter a year earlier. Sales increased 21% year-over-year, to Euro 21.510 billion. While sales and orders rose modestly in Germany, all other regions reported double-digit growth in both sales and orders for the quarter. Excluding currency translation and portfolio effects, second-quarter orders rose 9% and sales were up 8% year-over-year.
On a continuing basis, net cash from operating and investing activities within Operations in the second quarter was Euro 173 million compared to a negative Euro 153 million in the prior-year period. While the current period included significantly higher payouts from severance programs compared to the prior-year period, it also included higher proceeds from sales of investments. In both periods under review, Operations used significant cash for net working capital and capital expenditures associated with business growth. Within Financing and Real Estate and Corporate Treasury activities, net cash from operating and investing activities in the second quarter was Euro 228 million compared to Euro 295 million a year earlier. For Siemens on a continuing basis, operating and investing activities in the second quarter provided net cash of Euro 401 million compared to net cash provided of Euro 142 million a year earlier.-By Jonathan Cheah
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