Jan. 24 - Europe's biggest engineering conglomerate Siemens has posted an unexpectedly sharp fall in core profits, seeing a six-quarter streak of rising orders come to an end as the euro zone's debt woes hit corporate spending and investment. Andrew Potter reports.
With engineering exports ranging from trains to wind turbines, the performance of Siemens is a good indicator of the health of the European economy. With that in mind, its latest results make for gloomy reading. Although earnings were slightly up, Germany's largest company says new orders shrank five percent in the previous quarter. That hasn't happened since March 2010. Siemens first quarter operating profit was 1.6 billion euros, half a billion below that expected by a poll of analysts. Peter Loescher is Siemens president and CEO says the company is feeling the effects of the euro zone crisis. SOUNDBITE: PETER LOESCHER, SIEMENS PRESIDENT AND CEO, SAYING (English): "The volatility of the financial markets as well as the tightening of the fiscal policy, particularly in Europe, has also hit the real economy. We see hesitation of investment activity in some parts of the world. Growth drivers continue to be the emerging markets." Loescher says this has helped take Siemens orders to record levels, and he's still confident the company can continue to grow. But he says the company expects all of Europe except Germany to go in recession. And for this reason he says 2012 won't be an easy year, saying the company's "golden days" were over. Siemens shares have slid 16 percent in the past year, but improved slightly after the results were released. Andrew Potter, Reuters