RNS No 3216r
SIEMENS AG
22nd April 1998
Interim report for the period October 1, 1997 to March 31, 1998
Strong growth in international business
---------------------------------------
Sustained buoyancy in international markets enabled Siemens AG, Berlin and
Munich, to show strong growth in orders and sales in the first half of fiscal
1998. The positive trends of recent months in Germany also continued, boosting
business in the company's industry segment in particular. In Asia, sales still
showed double digit growth, while orders leveled off as anticipated. Worldwide,
new orders rose 10% and sales climbed 17%, with positive currency translation
effects contributing two percentage points. Net income excluding extraordinary
items increased to DM1.188 billion, compared with DM1.080 billion the previous
year. The sale of selected business activities generated extraordinary gains
after taxes of DM180 million in the period under review.
Worldwide, Siemens recorded orders valued at DM59.5 (1997: DM53.9) billion and
sales of DM52.1 (1997: DM44.7) billion. The main growth driver was the
components segment. The Private Communication Systems Group (PN), Automotive
Systems Group (AT), Automation and Drives Group (A&D), Osram, and Siemens
Nixdorf (SNI) also achieved especially high growth rates. International business
continued to push growth; new orders jumped 18% to DM42.1 (1997: DM35.7)
billion, and sales surged 25% to DM35.2 (1997: DM28.2) billion.
In Europe outside Germany, orders climbed 28% to DM18.6 billion, and sales
rose 21% to DM16.0 billion. Especially high growth was achieved in Denmark,
Greece, the United Kingdom, and Portugal. The company also continued to build
up its market position in Eastern Europe.
Siemens profited from the ongoing economic boom in North and South America,
pushing up new orders 26% to DM13.6 billion and boosting sales 31% to DM10.9
billion. In the U.S. alone, the volume of new orders rose 22% to DM8.3 billion
and sales climbed 30% to DM7.5 billion.
Despite the economic difficulties in Asia, Siemens'current major projects in
the region have not been affected to date. The company had already anticipated
that business would level off after the strong growth experienced in recent
years. Compared with figures for the previous boom year, new orders declined
11 % to DM6.5 billion during the period under review; nevertheless, this marks
an improvement over the first quarter of the current fiscal year, when orders
had dropped 16%. Sales, in contrast, increased 28% to DM5.3 billion.
In Germany, one-time factors accounted for the 4% decline in new orders to
DMl7.4 billion. Changes in the group of consolidated activities (including
the sale of the Defence Electronics Group, the ' i-center' wholesale
installation organization, and the dental business) contributed around five
percentage points to this total. Moreover, the high level of major contracts in
the Transportation Systems Group in the previous year accounted for a difference
of three percentage points. Calculated on a comparable basis, new orders showed
a positive trend. Domestic sales were up 3% to DM16.9 billion.
Among the company's business segments, components recorded the highest growth
rates in orders and sales. Despite continuing price pressure in the memory-chip
sector, the Semiconductors Group also managed to further expand its business
volume. The Power Generation Group (KWU), Medical Engineering Group (MED),
Automotive Systems Group (AT), Automation and Drives Group (A&D), Private Commu
nication Systems Group (PN), and Siemens Nixdorf (SNI) recorded above-average
growth in Orders. The Public Communication Networks Group (OEN) posted a
decline in orders, which was expected following the completion of the
digitization project for Deutsche Telekom. This dip is increasingly being
compensated for by the Group's growing international business. OEN recorded a
sharp increase in sales for the period, as did the Transportation Systems Group
(VT).
At March 31, 1998, Siemens had approximately 398,000 employees worldwide
(September 30, 1997: 386,000), including 194,000 (197,000) in Germany, and
204,000 (189,000) outside the country. These changes are primarily attributable
to consolidations and divestments of companies. Excluding these effects, the
size of the company's work-force in total, as well as in Germany, remained
virtually unchanged.
Capital spending for the six months under review totaled DM3.7 billion,
nearly matching last year's level of DM3.9 billion. The figure includes
financial investments of DMO.6 (1997: DMO.7) billion.
The 10% increase in net income to DM1.188 (1997: DM1.080) billion for the
period is in part attributable to improvements in the industry segment and at
Osram, as well as at SNI. As previously reported on a number of occasions,
including the Annual Shareholders' Meeting on February 19, 1998, growth in net
income will continue to be dampened during the fiscal year by provisions for
risks for the company's business in Southeast Asia, problems with a recently
introduced gas turbine product line, and eroding prices for memory chips.
Including the extraordinary gain from the sale of the company's dental business
and wholesale ' i-center' organization, net income reached DM 1.368 billion for
the first six months of the fiscal year.
Development of Siemens groups worldwide (incl. intersegment shipments)
(Basic figures for the period from October 1, 1997 to March 31, 1998;
in Billion DM)
NEW ORDERS SALES
10/96- 10/97- +% 10/96- 10/97- +%
03/97 03/98 03/97 03/98
Power Generation (KWU) 4,0 5,8 +44 2,4 2,6 +8
Power Transmission and
Distribution (EV) 3,4 3,8 + 6 2,4 2,6 +2
Industrial Projects and
Technical Services (ATD) 4,6 4,7 + 1 4,1 4,7 +14
Production and Logistics
Systems (PL) 0,7 1,1 - 7*) 0,6 1,2 +15 *)
Automation and Drives (A&D) 6,2 7,1 +15 5,7 6,5 +14
Public Communication
Networks (ON) 9,0 8,4 - 7 6,3 8,1 +28
Private Communication
Systems (PN) 5,1 6,5 +14 4,9 6,2 +13
Siemens Nixford Informa-
tion Systems (SNI) 7,6 8,6 +13 7,2 8,0 +10
Transportation Systems (VT) 3,2 2,3 -29 1,6 2,2 +33
Automotive Systemns (AT) 2,2 2,7 +22 2,2 2,7 +22
Medical Engineering (Med) 3,6 3,8 +23 *) 3,4 3,2 + 8 *)
Semiconductors (HL) 2,6 3,8 +45 2,3 3,3 +44
Passive Components and
Electron Tubes (PR) 1,2 1,5 +26 1,0 1,3 +26
Electromechanical Components
(EC) 0,6 0,9 +27 0,6 0,7 +18
Osram 3,2 3,5 +10 3,2 3,5 +10
1) Comparable due to acquisitions, divestments and reorganizations
Basic figures for the period from October 1 1997 - March 31 1998
1-10-96 1-10-97 Change
31-03-97 31-03-98 Variation
POS 1 2 3
1. New Orders 53,9 59,5 10%
2. Domestic Business 18,2 17.4 -4%
3. International Business 35,7 42,1 18%
4. Sales 44,7 52,1 17%
5. Domestic Business 16,5 16,9 3%
6. International Business 28,2 35,2 25%
30-9-97 31-03-98 Change
Variation
POS 4 5 6
7. Employees 386 398 3%
Personnel
8. Domestic Operations 197 194 -2%
9. International Operations 189 204 8%
1-10-96 1-10-97 Change
31-03-97 31-03-98 Variation
10. Capital Spending 3,9 3,7 -6%
11. Net income before extraordinary items 1,080 1,188 10%
Extraordinary item - 180
Net income incl.
extraordinary items 1,080 1,368
END
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