Siemens warns on profits and cuts jobs

MUNICH - Siemens, the German electronics and engineering giant, warned yesterday of a drop in group profits this year, as it announced plans to cut 10,000 jobs from a workforce of 400,000, writes John Eisenhammer.

Good results from Siemens' large investment holdings enabled the group to show a slight increase in profits to DM1.9bn last year, despite an 8 per cent decline in operating earnings. Heinrich von Pierer, chief executive, said more difficult conditions in financial markets this year meant investment profits would be less than the DM2.1bn last time.

With reduced earnings, falling prices, stagnant volumes and continuing heavy restructuring costs, Siemens expected more than a slight drop in overall profits, said Karl-Hermann Baumann, chief financial officer.

More than half of the lost jobs will come from Siemens-Nixdorf, the troubled computer subsidiary, which is expected to show a slightly reduced loss from the DM419m last year. Mr von Pierer appeared less confident than in the past about when SNI would break even, saying this should happen in two years, if the market permitted.

The other main loss-making sector, semi-conductors, displayed strong signs of improvement last year with a 33 per cent increase in orders.