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Industry

Costly blunders weigh on Siemens profits

The German engineering giant Siemens has lost ground to US rival General Electric after a substantial fall in quarterly profit. However, a drive to improve performance is well under way, its CEO ascertains.

Siemens net profit dropped by 12 percent to 1.2 billion euros ($1.6 billion) in its fiscal first quarter, which ended in December, according to figures released by the German industrial conglomerate Wednesday.

Because of an orders backlog from the previous months, revenues between October and December climbed 2 percent to 18 billion euros, the Munich-based company announced.

Delayed deliveries of new ICE trains to the German rail operator Deutsche Bahn had cost Siemens about 116 million euros, Chief Financial Officer Joe Kaeser said. In addition, writedowns to the tune of 150 million euros on its solar business also weighed heavily on the quarter's earnings.

By contrast, the firm's gas turbine and medical equipment businesses were highly profitable, he added, contributing almost half a billion euros to net earnings in the first quarter.

Describing the result as a solid start to fiscal 2013, Siemens Chief Executive Peter Löscher said he expected a moderate growth in new orders and a full-year profit of 4.5-5 billion euros in 2013.

Löscher admitted that Siemens lost further ground to General Electric, the world engineering leader, after the US company had announced both rising sales and profits for the same quarter.

Löscher said, however, that Siemens was starting to catch up in 2013 with the help of a cost-cutting program aimed at boosting the earnings margin from currently 9.5 percent to 12 percent by 2014.

uhe/mkg (AP, dpa, AFP)

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