RYCEY Rolls Royce Holdings PLC (PK)

BERLIN—Siemens AG reported a worse-than-expected 33% drop in fourth-quarter net profit, but the German industrial giant forecast sales and earnings growth in the quarters ahead as it plans to return more cash to shareholders.

Siemens said on Thursday that net profit fell to €959 million ($1.03 billion) in the three months to end-September from €1.45 billion during the same period last year, falling short of analysts' expectations. Analysts had forecast a net profit of €1.2 billion in the latest period, according to a recent poll conducted by The Wall Street Journal.

Part of the decline reflected an impairment charge of €138 million in connection with the company's stake in Primetals Technologies Ltd.

The group—whose activities range from making power equipment to trains and medical scanners—reported a 10.1% profit margin for its industrial businesses in the year to Sept. 30, at the lower end of the range of its target range of 10% to 11%.

"We delivered what we promised and are well prepared to deliver on our plans for the year ahead," said Siemens Chief Executive Joe Kaeser.

Despite a "further softening" in the macroeconomic environment and ongoing geopolitical "complexity" in fiscal 2016, Siemens said it expects an industrial profit margin in the range of 10% to 11%, "moderate" revenue growth, a book-to-bill ratio above one, and earnings a share between €5.9 and €6.2, up from €5.18 in 2015.

Siemens proposed a shareholders dividend of €3.5 for fiscal year 2015, up 6% from €3.3 for the previous year, while also announcing plans for a new share buyback program with a volume up to €3 billion over the next 36 months.

Siemens's fourth-quarter profit margin rose to 11.3% from 10.9% last year, with an improved performance at its energy-management, wind-power and renewables, health-care and transport divisions offset squeezed margins at its conventional energy and industrial-drives units.

Profitability at the group's power and gas business was primarily held back by severance charges and lower margins in the gas-turbine business, though the acquisitions of Rolls-Royce's energy business and U.S. oil equipment manufacturer Dresser-Rand boosted revenue and orders. This was the first quarter that Dresser Rand--the $7.8 billion deal closed in June--was consolidated in Siemens's results.

That acquisition, first announced last year, was part of a larger move by Mr. Kaeser to focus the company more squarely on energy, a strategy that has come under pressure amid lower global oil prices over the past year.

Fourth-quarter revenue rose by 4%, to €21.33 billion, while new orders climbed by 15%, to €23.72 billion, helped by the tailwind of the euro's weakness against major currencies, the company said. Among the new orders was a €1.2 billion contract for an offshore wind farm and wind-power services in Germany.

Write to Christopher Alessi at christopher.alessi@wsj.com

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(END) Dow Jones Newswires

November 12, 2015 04:05 ET (09:05 GMT)

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