Siemens posts profits rise but doesn't rule out further job cuts

GERMAN industrial giant Siemens saw its net profit rise 24 per cent in the last three months of 2009, but the conglomerate has not ruled out job cuts.

The company – part of the consortium building Edinburgh's tram network – made 1.5 billion (1.3bn) in the October to December period, its first fiscal quarter. This was up from 1.2bn a year earlier, with the company saying it was helped by cost savings and stabilising demand.

However, revenue fell 12 per cent to 17.4bn, with all divisions contributing to the decline. Siemens' products range from light bulbs to high-speed trains.

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The Munich-based company said orders of nearly 19bn were down 15 per cent on the year, reflecting contractions in industrial and energy infrastructure markets which lag behind the broader economic cycle.

In the industrial sector, Siemens saw revenue drop 13 per cent to 8.1bn.

Energy revenue fell 10 per cent to 5.6bn, while the health care sector saw a 4 per cent drop to 2.8bn.

While the industry division reported an operating profit decline of 2 per cent, the energy unit increased its profit 9 per cent and health care – which saw one-time charges a year earlier – increased its profit by 53 per cent.

Siemens said it expects a mid-single-digit percentage decline in organic revenue this year.

Chief executive Peter Loescher said the company could not rule out future layoffs.

"It will take some time for the gradual recovery of the world economy to arrive in industry while long-cycle business will have to cross a deep valley," he said.

He added that there "is no need for another company-wide cost savings programme" but that in some circumstances, "adjustments are unavoidable".

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As well as Siemens, the Edinburgh tram consortium – which has attracted controversy over the cost of the project and disruption in the city – is made up of Bilfinger Berger and CAF.