RNS Number:0188S
Siemens AG
13 November 2003
Press Presse Prensa
For the business and financial press
Munich, November 13, 2003
Siemens in fiscal 2003 (ended September 30, 2003)
Net income for fiscal 2003 was Euro2.445 billion, representing a 47% increase from
Euro1.661 billion a year earlier, excluding a tax-free gain of Euro936 million from
sales of Infineon shares.
*
* Group profit from Operations increased to Euro4.295 billion. The majority
of Siemens Groups reported higher earnings and margins year-over-year.
* Net cash from operating and investing activities was Euro1.773 billion,
including Euro5.712 billion in net cash from operating activities. Net cash
provided by operating activities included cash outflows of Euro1.192 billion in
supplemental cash contributions to Siemens pension trusts. Net cash used in
investing activities of Euro3.939 billion included increases in investments and
marketable securities of Euro957 million, and Euro929 million for a strategic
acquisition at Power Generation.
* Sales were Euro74.233 billion and orders were Euro75.056 billion, down 12%
and 13%, respectively from the prior year. Adjusting for currency effects and
portfolio activities, sales and orders were 4% and 5% lower, respectively, than
a year earlier.
* Siemens management proposes a dividend of Euro1.10 per share.
* For the fourth quarter, net income rose sharply year-over-year, to Euro724
million, and Group profit from Operations climbed 56%, to Euro1.102 billion. Net
cash from operating and investing activities of Euro1.246 billion included Euro750
million in supplemental cash pension contributions. Fourth-quarter sales and
orders were 7% and 4% lower than the prior year quarter but rose 14% and 8%,
respectively, compared to the third quarter of fiscal 2003.
* In October 2003, at the beginning of the new fiscal year, Siemens made
additional supplemental cash pension contributions of Euro1.255 billion.
"Operation 2003 has been a clear success," said Siemens CEO Heinrich v. Pierer.
"We increased net income nearly 50% compared to the prior year, on a comparable
basis. The other objectives we achieved, such as strong cash flows from
Operations, are also signs of improved operational performance. Given the
difficult economic environment during fiscal 2003, these achievements represent
a major success."
"Following the volume declines of the past year, which were substantially driven
by currency translation, our goal in fiscal 2004 is to restore growth and win
market share," Pierer said. "As a number of our Groups have demonstrated, we are
well positioned for this effort, with our clear customer focus, strength in
innovation, global competitiveness, and sound financial condition. These
qualities also create the basis for double-digit percentage growth in net income
for fiscal 2004, assuming generally stable economic conditions."
For the fiscal year ended September 30, 2003, Siemens reported net income of
Euro2.445 billion and earnings per share of Euro2.75. Fiscal 2002 included a tax-free
gain of Euro936 million on sales of shares in Infineon Technologies AG, which
boosted net income in that period to Euro2.597 billion and earnings per share to
Euro2.92. Excluding the Infineon gain, net income rose 47% year-over-year from
Euro1.661 billion. The major component of this improvement was growth in Group
profit from Operations, which climbed 14% to Euro4.295 billion for the year. Group
profit margins rose at 10 of the 13 Groups in Operations and at Siemens
Financial Services (SFS). Losses related to Siemens' ownership of Infineon
decreased and positive effects from Corporate Treasury also contributed to net
income growth for the year.
Net cash from operating and investing activities was Euro1.773 billion in fiscal
2003 compared to Euro4.754 billion a year earlier, a period which included
significant net proceeds from portfolio activities. Within Operations, net cash
provided by operating activities was Euro4.123 billion compared to Euro4.277 billion
in the prior year. Both periods included supplemental cash contributions to
Siemens pension trusts, totaling Euro1.192 billion and Euro1.782 billion in fiscal
2003 and 2002, respectively. In fiscal 2003, net cash used in investing
activities of Euro3.939 billion included Euro929 million to acquire the
industrial turbine businesses of Alstom S.A., and Euro957 million in increases in
investments and marketable securities.
Sales of Euro74.233 billion and orders of Euro75.056 billion reflected macroeconomic
conditions,
the strong decline in the value of the U.S. dollar relative to the euro during
the fiscal year, and the net effects of acquisitions and dispositions compared
to fiscal 2002. Excluding currency and portfolio effects (i.e., on a comparable
basis), sales and orders were within 4% and 5%, respectively, of prior-year
levels. Against this backdrop, a number of Siemens' earnings leaders increased
both sales and orders year-over-year on a comparable basis, including Medical
Solutions (Med), Automation and Drives (A&D), Siemens VDO Automotive (SV), and
Osram.
Siemens worldwide results for the fourth quarter of fiscal 2003
For the fourth quarter of fiscal 2003, net income rose sharply, to Euro724 million
from Euro53 million a year earlier, and earnings per share were Euro0.81, up from
Euro0.06 in the same period a year earlier. The driver again was strong growth in
Group profit from Operations, which climbed to Euro1.102 billion from Euro707 million
in the fourth quarter a year ago. A majority of the Groups improved their bottom
lines year-over-year, including a return to profitability at Information and
Communication Networks (ICN). Fourth-quarter sales of Euro19.778 billion were
within 2% of prior-year levels on a comparable basis, while fourth-quarter
orders of Euro18.612 billion were 2% higher than a year earlier on a comparable
basis. Sales grew 14% compared to the immediately prior quarter, on the strength
of double-digit percentage increases at the majority of the Groups. Orders
increased 8% compared to the third quarter of fiscal 2003. Net cash from
operating activities was Euro2.402 billion for the fourth quarter, after Siemens
made a supplemental cash pension contribution of Euro750 million. Net cash from
operating and investing activities was Euro1.246 billion, including Euro424 million to
complete the Alstom acquisition.
Operations in fiscal 2003
Information and Communications
Information and Communication Networks (ICN)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change* Change
New Orders 1,685 (10)% (6)% 7,070 (19)% (14)%
Total Sales 1,952 (14)% (10)% 7,122 (26)% (21)%
2003 2002 2003 2002
Group Profit 57 (325) (366) (691)
"comparable basis" refers to comparison excluding the effects of currency
translation and the net effects of acquisitions and dispositions
In the Information and Communications business area, ICN improved its
performance despite ongoing market challenges. The positive trend was
particularly evident in the fourth quarter, when ICN posted Group profit of Euro57
million compared to a loss of Euro325 million in the same period a year earlier.
The Enterprise Networks and Carrier Networks and Services businesses both
contributed positive earnings in the fourth quarter. For the year as a whole,
ICN cut its loss to Euro366 million from Euro691 million in fiscal 2002, a period that
benefited from gains on asset sales and a divestment, partially offset by an
asset impairment. Charges for severance in fiscal 2003 were substantially lower
than in the prior fiscal year. Sales of Euro7.122 billion and orders of Euro7.070
billion reflect the overall contraction in the telecom market year-over-year. At
the division level, the Carrier Networks and Services business substantially
reduced its loss and recorded sales of Euro3.455 billion for the year. Enterprise
Networks reported progressively higher profits in all four quarters, and more
than doubled its profit year-over-year. The division benefited primarily from a
streamlined cost structure, and also from higher market demand for lease sales.
Information and Communication Mobile (ICM)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 2,838 12% 15% 9,960 (14)% (10)%
Total Sales 2,619 (2)% 1% 9,964 (10)% (6)%
2003 2002 2003 2002
Group Profit 49 24 180 96
Group profit at ICM rose to Euro180 million in fiscal 2003, including charges for
severance comparable in amount to the prior year. Sales of Euro9.964 billion and
orders of Euro9.960 billion reflected the continuing decline in the wireless
infrastructure market. Handset sales at Mobile Phones surged to 39.1 million
units from 33.3 million units a year earlier on strong demand for new products
and sales rose 5% to Euro4.474 billion for the year. Earnings of Euro27 million were
down from Euro82 million a year earlier, as increased competition drove a reduction
in average selling price per unit, and a separately branded handset line
incurred operating losses and charges to inventory. The Cordless Products
business again made a significant contribution to ICM's Group profit. Mobile
Networks recorded earnings of Euro116 million, as charges for severance were more
than offset by positive resolutions of customer financing risks and recorded
sales of Euro4.311 billion. Fourth-quarter Group profit for ICM rose to Euro49 million
from Euro24 million a year earlier. Within that total, Mobile Networks increased
its profit to Euro60 million on sales of Euro1.078 billion. Handset sales in the
fourth quarter at Mobile Phones rose to 12.0 million units from 7.8 million in
the same period a year earlier, resulting in sales of Euro1.260 billion.
Fourth-quarter profits of Euro14 million did not reach prior-year levels, however,
as the period included most of the impacts related to the handset line mentioned
above. Fourth-quarter sales for ICM overall were Euro2.619 billion, nearly level
with the same period a year earlier, while fourth-quarter orders rose 12%
year-over-year, to Euro2.838 billion, on strong handset orders.
Siemens Business Services (SBS)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 1,244 (17)% (16)% 5,226 (16)% (14)%
Total Sales 1,317 (11)% (9)% 5,205 (10)% (7)%
2003 2002 2003 2002
Group Profit (41) 26 13 101
SBS posted a Group profit of Euro13 million for the fiscal year compared to Euro101
million in fiscal 2002. The decline primarily reflects Euro77 million in charges
for risks associated with a long-term business process outsourcing contract in
the U.K. Sales of Euro5.205 billion and orders of Euro5.226 billion reflect relative
weakness in the IT consulting market year-over-year, as well as pricing pressure
in the IT maintenance and outsourcing markets.
The charge referred to above occurred in the fourth quarter, resulting in a loss
for the period of Euro41 million on sales of Euro1.317 billion.
Automation and Control
Automation and Drives (A&D)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 2,009 (5)% (1)% 8,476 (3)% 2%
Total Sales 2,285 (5)% (2)% 8,375 (3)% 2%
2003 2002 2003 2002
Group Profit 240 219 806 723
In the Automation and Control business area, A&D was again a standout among
Siemens Groups, increasing Group profit 11% year-over-year to Euro806 million,
further improving its Group profit margin to 9.6%, and strengthening its market
position. Sales of Euro8.375 billion and orders of Euro8.476 billion each rose 2%
year-over-year on a comparable basis, as A&D continued to balance its business
base with growth in the Asia-Pacific region and market-share gains in Europe.
Group profit rose quarter by quarter throughout the year, reaching Euro240 million
in the fourth quarter. A&D's Group profit margin of 10.5% in the fourth quarter
enabled it to increase Group profit 10% over the prior-year quarter. On a
comparable basis, sales and orders were nearly level with the prior year.
Industrial Solutions & Services (I&S)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 959 1% 5% 3,955 (4)% 1%
Total Sales 1,134 (13)% (10)% 4,012 (10)% (6)%
2003 2002 2003 2002
Group Profit (17) (129) (41) (198)
I&S significantly improved its bottom line, posting a Group loss of Euro41 million
compared to a loss of Euro198 million a year earlier, in part due to lower charges
for severance and capacity adjustments. Sales of Euro4.012 billion and orders of
Euro3.955 billion reflected a continuing contraction in the market for industrial
solutions. In the fourth quarter, I&S
recorded a loss of Euro17 million compared to a loss of Euro129 million in the same
period a year ago, which included significantly higher charges for severance and
capacity adjustments. While fourth-quarter sales were lower year-over-year,
fourth-quarter orders rose 5% on a comparable basis.
Siemens Dematic (SD)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 802 31% 41% 2,599 (8)% 2%
Total Sales 680 (3)% 4% 2,600 (13)% (4)%
2003 2002 2003 2002
Group Profit (178) 10 (218) 45
SD posted a Group loss of Euro218 million for the year, compared to Group profit of
Euro45 million in fiscal 2002. A substantial increase in loss provisions and
charges related to two large contracts in Europe was the key factor in this
result, together with other charges. On a comparable basis, sales of Euro2.600
billion were within 4% of the prior-year level, and orders were 2% higher at
Euro2.599 billion. The Postal Automation Division increased its profit and earnings
margin and won large orders from the U.S. Postal Service, while the Electronics
Assembly Systems Division narrowed its loss year-over-year and restored sales
growth in its large pick-and-place equipment business on a breakeven basis. Most
of the increased provisions and charges mentioned above were recorded in the
fourth quarter, resulting in a loss of Euro178 million compared to a profit of Euro10
million in the same period a year ago. On a comparable basis, fourth-quarter
sales rose 4% and orders jumped 41%, respectively, over the same period a year
earlier.
Siemens Building Technologies (SBT)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 1,146 (21)% (17)% 4,775 (15)% (9)%
Total Sales 1,400 (13)% (8)% 4,990 (11)% (5)%
2003 2002 2003 2002
Group Profit 38 87 101 195
Group profit at SBT was Euro101 million for the fiscal year, which included
significantly higher charges for severance taken to realign the Group's
workforce with market conditions. Group profit a year earlier was Euro195 million.
Sales of Euro4.990 billion and orders of Euro4.775 billion reflect weak demand in
SBT's markets, plus six percentage points due to currency effects.
Fourth-quarter results were in line with the year as a whole. Group profit was
Euro38 million compared to Euro87 million a year earlier, due in part to lower sales
of Euro1.400 billion.
Power
Power Generation (PG)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 1,223 (15)% (21)% 7,302 (31)% (27)%
Total Sales 1,961 (15)% (17)% 6,967 (26)% (19)%
2003 2002 2003 2002
Group Profit 221 354 1,171 1,582
In the Power business area, PG led all Siemens Groups with Euro1.171 billion in
Group profit and a Group profit margin of 16.8%. In fiscal 2003, PG increased
the percentage of its revenues and profits coming from services, acquired the
industrial turbine businesses of Alstom to complement its existing large turbine
business, and further diversified its business base. The negative demand trend
in the U.S. market continues to affect comparison of PG's sales and orders with
prior periods, and currency translation effects further reduced reported
volumes. PG maintained its Group profit margin at the same level as a year
earlier, however, in part due to higher net gains on customer cancellations and
lower severance charges compared to fiscal 2002. For the fourth quarter of
fiscal 2003, PG posted Group profit of Euro221 million compared to Euro354 million in
the same period a year earlier. Sales and orders of Euro1.961 billion and Euro1.223
billion, respectively, were lower than in the same quarter a year earlier but
declined at a more modest pace than for the full year. The Group's order backlog
stood at Euro14.3 billion at year-end, comparable to the level in recent quarters.
Power Transmission and Distribution (PTD)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 798 1% 21% 3,586 (19)% (3)%
Total Sales 882 (26)% (12)% 3,399 (19)% (2)%
2003 2002 2003 2002
Group Profit 65 16 207 109
PTD delivered Euro207 million in Group profit compared to Euro109 million a year
earlier, generated particularly at the High Voltage and Medium Voltage
divisions. Fiscal 2002 Group profit included a Euro54 million loss on the sale of
the Group's Metering division in the fourth quarter. On a comparable basis,
sales of Euro3.399 billion and orders of Euro3.586 billion were within 2% and 3%,
respectively, of prior-year levels. PTD's Group profit and Group profit margin
in the fourth quarter rose sharply year-over-year, to Euro65 million and 7.4%,
respectively. While fourth-quarter sales were below the level a year earlier,
fourth-quarter orders surged 21% over the prior year on a comparable basis.
Transportation
Transportation Systems (TS)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 1,418 - 7% 4,674 (11)% (8)%
Total Sales 1,416 14% 15% 4,697 8% 11%
2003 2002 2003 2002
Group Profit 78 74 284 247
In the Transportation business area, TS increased its Group profit 15%, to Euro284
million, despite having to take higher warranty provisions. Sales for the year
rose to Euro4.697 billion, as TS converted large orders from prior years into
current business. Orders for the year of Euro4.674 billion included large new
rolling stock contracts in China, England, Norway, and Switzerland as well as
major new maintenance contracts in the U.K. Both Group profit and sales hit high
points for the year in the fourth quarter, with Group profit reaching Euro78
million despite higher warranty charges and sales rising 15% year-over-year, on
a comparable basis, to Euro1.416 billion.
Fourth-quarter orders rose 7% year-over-year on a comparable basis, and the
Group's order backlog remained steady at Euro11.2 billion.
Siemens VDO Automotive (SV)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 1,967 (4)% 7% 8,375 (2)% 8%
Total Sales 1,967 (4)% 7% 8,375 (2)% 8%
2003 2002 2003 2002
Group Profit 115 (15) 418 65
SV accelerated to Group profit of Euro418 million for the year compared to Euro65
million a year earlier. The Group's innovative diesel injection and onboard
infotainment systems were major factors in the earnings improvement. SV's
profitability improvement program also contributed to earnings growth, as the
Group cut materials costs, streamlined its R&D and production processes, and
tightened administrative and IT spending. As a result, SV increased its Group
profit margin from 0.8% in fiscal 2002 to 5.0% in fiscal 2003, though it still
fell short of earning its cost of capital. Sales and orders of Euro8.375 billion
rose 8% year-over-year on a comparable basis, particularly related to the
transfer of parts of SV's automotive cockpit module business to a joint venture
in the third quarter. Fourth-quarter Group profit reached Euro115 million compared
to a loss of Euro15 million a year earlier. On a comparable basis, fourth-quarter
sales and orders rose 7% year-over-year.
Medical
Medical Solutions (Med)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 2,330 (3)% 6% 7,835 (7)% 3%
Total Sales 2,040 (3)% 5% 7,422 (3)% 7%
2003 2002 2003 2002
Group Profit 286 301 1,118 1,018
In the Medical business area, Med increased its Group profit 10%, to Euro1.118
billion, and its Group profit margin climbed above 15% for the year. Innovative
new products, particularly for diagnostic imaging applications, again led the
way. Group profit benefited also from a Euro63 million gain related to the
contribution of a portion of Med's electromedical systems business to a new
joint venture, Draeger Medical, in the third quarter. The divestment of the
remaining portion of the electromedical systems business, announced in the
fourth quarter, did not take effect until after the close of the fiscal year. On
a comparable basis, sales rose 7% to Euro7.422 billion and orders increased 3% to
Euro7.835 billion from a year earlier, as Med continued to find growth
opportunities in the highly competitive U.S. market. Med's fourth-quarter Group
profit was Euro286 million compared to Euro301 million a year earlier. Fourth-quarter
sales and orders were up 5% and 6%, respectively, from the levels a year earlier
on a comparable basis.
Lighting
Osram
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
New Orders 1,018 (3)% 4% 4,172 (4)% 6%
Total Sales 1,018 (3)% 4% 4,172 (4)% 6%
2003 2002 2003 2002
Group Profit 105 95 410 365
In the Lighting business area, Osram generated Euro410 million in Group profit, a
12% increase over the prior year, and improved its Group profit margin still
further, to nearly 10%. Steadily increasing profitability at the Opto
Semiconductors Division was a key factor in earnings growth, and stringent cost
containment helped offset intense pricing pressure. Sales and orders grew 6%
year-over-year on a comparable basis, to Euro4.172 billion, as the General Lighting
Division strengthened its market position in the U.S. and the Group expanded its
business in the Asia-Pacific region and eastern Europe. Fourth-quarter Group
profit rose 11% year-over-year, to Euro105 million, on a 10.3% Group profit margin.
Fourth-quarter sales and orders rose 4% year-over-year on a comparable basis.
Other operations consist of centrally held equity investments and other
operating businesses not related to a Group, such as Siemens' joint ventures
with Bosch (for household appliances) and Fujitsu (for computers). In fiscal
2003, higher contributions from these joint ventures resulted in Group profit
from other operations of Euro212 million in fiscal 2003 compared to Euro99 million in
the prior year.
Corporate items, pensions and eliminations
Corporate items, pensions and eliminations were a negative Euro1.576 billion in
fiscal 2003, compared to a negative Euro1.282 billion in the same period a year
earlier. Within this total, Corporate items were Euro747 million, down from Euro947
million in the prior year, due primarily to a lower loss related to Siemens'
equity interest in Infineon, the positive resolution of an arbitration
proceeding and reduced corporate costs. Non-allocated pension expense was higher
in fiscal 2003, at Euro828 million compared to Euro250 million a year earlier, while
fiscal 2002 included Euro133 million in gains on the sale of investments. In the
fourth quarter, Corporate items, pensions, and eliminations were a negative Euro320
million, compared to a negative Euro531 million a year earlier. This change
primarily reflects the effect of Siemens' equity interest in Infineon, which was
a positive Euro17 million in fiscal 2003 compared to a negative Euro204 million year
earlier.
Financing and Real Estate
Siemens Financial Services (SFS)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
Total Sales 122 (17)% (12)% 532 (9)% (4)%
2003 2002 2003 2002
Income before income taxes 56 50 269 216
Income before income taxes rose 25% at SFS, to Euro269 million compared to Euro216
million a year ago. The Equity Division again contributed to higher earnings for
the Group, which also benefited from lower provisions and write-downs at its
Equipment and Sales Financing Division. Fourth-quarter income before income
taxes at SFS rose to Euro56 million from Euro50 million a year earlier.
Siemens Real Estate (SRE)
Fourth quarter ended Fiscal Year ended
Sept. 30 Sept. 30
(Euro in millions) 2003 Change Comparable 2003 Change Comparable
Change Change
Total Sales 410 (1)% (1)% 1,592 (1)% (1)%
2003 2002 2003 2002
Income before income taxes 19 9 206 229
SRE earned Euro206 million before income taxes compared to Euro229 million a year
earlier, as lower interest costs were more than offset by the effects of lower
occupancy rates. Sales edged down 1% to Euro1.592 billion. While sales in the
fourth quarter were nearly unchanged year-over-year, income before income taxes
for the period rose to Euro19 million from Euro9 million a year earlier primarily due
to lower maintenance expenses.
Eliminations, reclassifications and Corporate Treasury
Income before income taxes from Eliminations reclassifications and Corporate
Treasury was Euro266 million, up from a loss in the prior year, which included the
significant negative results of Infineon until it was deconsolidated in December
2001. Furthermore, the improvement in the current year results include positive
effects from Corporate Treasury. Fourth-quarter income before income taxes in
fiscal 2003 for Eliminations, Reclassifications and Corporate Treasury was Euro122
million.
Income Statement highlights and earnings per share for fiscal 2003
Net sales for Siemens worldwide were Euro74.233 billion in fiscal 2003 compared to
Euro84.016 billion a year earlier. Net income for Siemens worldwide was Euro2.445
billion compared to Euro1.661 billion in fiscal 2002, excluding a Euro936 million
tax-free gain on the sale of shares in Infineon. Including this gain, net income
in fiscal 2002 was Euro2.597 billion.
In Operations, net sales in fiscal 2003 were Euro73.744 billion compared to Euro83.127
billion a year earlier, strongly influenced by negative currency translation
effects. Gross profit margin increased to 27.7% from 27.4%. Most of the
Operations Groups increased their gross margins, led by ICN, PTD, SV and Med.
SD's margin decreased primarily due to increased contract loss accruals taken in
the fourth quarter. Research and development
expense was 6.9% of sales, near the level in fiscal 2002. Marketing, selling and
general administrative expense decreased to 18.0% of sales due to effective
cost-cutting programs, particularly at ICN, ICM, I&S, SV and Osram. Other
operating income (expense), net was a positive Euro555 million, including Euro359
million in net gains from customer cancellations at PG, which are partly offset
by inventory allowances recorded in cost of sales. Also included in other
operating income (expense) is a Euro63 million gain arising from Med's contribution
of assets to a joint venture. Other operating income in fiscal 2002 was Euro326
million, as sales of a business and divestments more than offset a significant
impairment charge at ICN.
Income from investments in other companies was a positive Euro66 million, up from a
negative Euro142 million in the prior year, primarily due to higher earnings from
joint ventures and lower losses year-over-year at Infineon, in which Siemens
holds an equity interest. Earnings per share for the year were Euro2.75. Excluding
the gain on sales of shares in Infineon referred to above, earnings per share in
fiscal 2002 were Euro1.87.
Orders and sales trends in fiscal 2003
Orders in fiscal 2003 were Euro75.056 billion compared to Euro86.214 billion a year
earlier, and sales in fiscal 2003 were Euro74.233 billion compared to Euro84.016
billion. The declines year-over-year included eight percentage points due to
currency and portfolio effects. Orders in Germany in fiscal 2003 were Euro16.796
billion compared to Euro17.812 billion the same period a year earlier. Sales in
Germany were Euro17.100 billion compared to Euro18.102 billion a year earlier.
International orders were Euro58.260 billion compared to Euro68.402 billion a year
earlier, and international sales were Euro57.133 billion compared to Euro65.914
billion a year earlier. The declines in international volume year-over-year
included nine percentage points due to currency and portfolio effects.
Orders in the U.S. in fiscal 2003 were Euro14.702 billion compared to Euro21.205
billion a year earlier. Sales in the U.S. were Euro15.357 billion compared to
Euro20.288 billion in the prior year, influenced by expected volume declines at PG
following the end of the gas turbine energy boom and a negative 14% currency
translation effect. Orders in Asia-Pacific in fiscal 2003 were Euro9.152 billion
compared to Euro10.092 billion and sales were Euro8.728 billion compared to Euro9.668
billion a year earlier, influenced by currency and portfolio
effects. Sales in China in fiscal 2003 were Euro2.838 billion compared to Euro3.223
billion a year earlier, due in large part to the effect of currency translation.
Liquidity and balance sheet highlights for the fiscal year
For Siemens worldwide, net cash from operating and investing activities was
Euro1.773 billion in fiscal 2003 compared to Euro4.754 billion a year earlier, a
period which included significant net proceeds from portfolio activities. Within
Operations, net cash provided by operating activities was Euro4.123 billion
compared to Euro4.277 billion in the prior year. Both periods included supplemental
cash contributions to Siemens pension trusts, totaling Euro1.192 billion and Euro1.782
billion in fiscal 2003 and 2002, respectively.
Net cash used in investing activities within Operations was Euro3.655 billion in
fiscal 2003, which includes Euro929 million for the acquisition of the industrial
turbine businesses of Alstom, and Euro841 million to expand holdings of investments
and marketable securities. Net cash used in investing activities within
Operations was Euro250 million in fiscal 2002. That prior-year period included
proceeds from sales and dispositions totalling Euro6.097 billion, including Euro1.522
billion related to sales of shares of Infineon, partially offset by a Euro3.657
billion payment to complete the Atecs-Mannesmann acquisition.
Net cash provided by operating activities within the Financing and Real Estate
component was Euro469 million in fiscal 2003, supported by strong earnings at SFS.
Investing activities within the Financing and Real Estate component used net
cash of Euro515 million, due in part to increased financing receivables.
Funding Status of Pension Plans
The status of Siemens' principal pension plans did not change significantly
compared to the prior year, remaining underfunded by approximately Euro5.0 billion.
Two offsetting factors contributed to this effect. In the first and fourth
quarters, the Company made supplemental contributions of Euro1.192 billion in cash
and Euro377 million in real estate. Offsetting this effect was an increase in the
projected benefit obligation of the plans as a result of a reduction in the
plan's weighted average discount rates from 6.0% to 5.4%
associated with the general decline in interest rates worldwide. This in turn
increased the projected benefit obligation of Siemens' pension plans by Euro1.4
billion.
Economic Value Added
Siemens worldwide realized a positive economic value added (EVA) of Euro449 million
in fiscal 2003, an improvement of Euro768 million compared to the prior year amount
of a negative Euro319 million, excluding a Euro936 million tax-free gain on the sale
of shares in Infineon. Including this gain, EVA for fiscal 2002 was a positive
Euro617 million.
Subsequent event
After the close of fiscal 2003, in October 2003 Med completed the sale of its
life support systems business to Getinge AB, of Sweden. Also in October 2003
Siemens made additional supplemental cash pension contributions to its pension
trusts of Euro1.255 billion.
Note: Please see a reconciliation of the calculation of Economic Value Added on
our website: www.siemens.com/investor_relations
The Siemens Annual Press Conference will be transmitted live on the Internet
beginning at 10:00 a.m. CET on November 13, 2003.
You can access the conference at www.siemens.com/pressconference.
Siemens CEO Heinrich v. Pierer and CFO Heinz-Joachim Neuburger will hold an
English-language conference with analysts on November, 14, 2003 at 3.00 p.m.
CET. You can follow this conference live on the Internet by going to
www.siemens.com/analystconference. A recording of the telephone conference will
be available later at the same location.
This press release report contains forward-looking statements based on beliefs
of Siemens' management. The words "anticipate," "believe," "estimate,"
"forecast," "expect," "intend," "plan", "should" and "project" are used to
identify forward-looking statements. Such statements reflect the company's
current views with respect to future events and are subject to risks and
uncertainties. Many factors could cause the actual results to be materially
different, including, among others, changes in general economic and business
conditions, changes in currency exchange rates and interest rates, introduction
of competing products, lack of acceptance of new products or services and
changes in business strategy. Actual results may vary materially from those
projected here. Siemens does not intend or assume any obligation to update these
forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
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