Europe's biggest engineering firm, Siemens, has logged an unexpectedly large drop in net profit in the second quarter of the fiscal year. The company puts it down to massive write-downs and power grid problems.
German engineering group Siemens experienced a disappointing second quarter, the firm reported on Wednesday, with net profit falling more than 60 percent.
January-to-March earnings dropped from 2.84 billion euros ($3.74 billion) to just 1.02 billion euros year-on-year.
"The second quarter wasn't easy for us at all," Chief Executive Peter Löscher said in a statement. He pointed out, though, that revenues in the period rose in all of the company's business fields, totaling 19.3 billion euros.
However, Siemens reported a shortfall of new orders, coupled with massive losses over its participation in the Nokia Siemens Network (NSN) joint venture. The company was dragged down by a loss of 640 million euros due to efforts to restructure the ailing telecommunications equipment maker. NSN is currently cutting 17,000 worldwide in a bid to become more competitive again.
Power grid problems
But the write-down was not the only bitter pill that Siemens had to swallow in the fiscal year's second quarter. The company reported charges of 278 million euros in its power transmission segment, which also diluted its earnings.
Siemens, a major producer of wind turbines, is grappling with huge problems in hooking up wind farms in the north of the country to the national energy grid.
Because of the drop in net profit in the second consecutive quarter, Siemens drastically revised its earnings forecast downward for the current year as a whole. The firm now expects earnings to reach between 5.2 and 5.4 billion euros, instead of the six billion euros predicted at the beginning of the year.
hg/sgb (dpa, dapd, AP)