Siemens reduces profits forecast
Siemens has significantly reduced its profits forecast after a review of major projects. According to a press release (PDF file), earnings in the current quarter are expected to be 900 million euros less than predicted. The review covered IT Solutions and Services, electricity generation and mobility.
The Financial Times reports that the power generation division accounts for 600 million euros of the deficit. Capacity limits are reported to have been exceeded and Siemens is said to be having difficulties finding engineers. The increased price of raw materials and supplier bottlenecks are also affecting business. The rail division has a deficit of around 200 million euros, which is largely the result of problems with its 'Combino' train. The cancellation of a large contract in the UK contributed to a deficit of 100 million euros for the IT division.
According to the press release, results so far “indicate a substantial impact on earnings in the current fiscal year”. The conglomerate had confirmed its predictions for the current financial year as recently as January. Siemens has, however, confirmed its targets for 2010. The company’s shares are currently down by over 12 percent.