Siemens AG posted flat fiscal second quarter earnings on modest top-line growth, fueled primarily by continuing strength in the company's Americas and Asia Pacific groups, as well as gathering momentum in its Automation and Drives business unit.
For the quarter ended March 31, the diversified German company posted a 4% revenue increase to €18.563 billion, with €781 million dropping to the bottom line. This compared with profits of €807 million in the like period last year, not including gains from the divestiture of Infineon Technologies A.G. Siemens' A&D group was the company's a top-performer in the period, generating earnings of €277 million on a 7% sales increase to €2.258 -- achieving a 12.3% profit margin.
"In [the A&D] segment, we're growing nearly three times as fast as the market," said Klaus Kleinfeld, Siemens AG president and CEO at the semiannual press conference in Lisbon, Portugal. "Asia and the Americas are the main drivers. In Asia alone, the growth rate was once again roughly 30%. In the Americas, adjusted for currency effects, the figure was 15%. This was the result of our highly innovative products and systems based on a fully integrated automation platform (Totally Integrated Automation)."
Industry observers point to a new brand awareness campaign launched last year that has ignited the interest of manufacturers, especially in the United States. The company brought its "demo train" around the world, stopping in key cities in the U.S to show off its automation technology. "Over the course of last year end users visiting these venues were suddenly exposed to a tremendous variety of solutions," said Sath Rao, industry manager for industrial automation and process control at market reseacher Frost & Sullivan. "Siemens has great application expertise for troublesome control issues pertaining to a wide variety of industries all the way from discrete manufacturing to process. Some of the feedback I've been getting from interviews with end users is that people truly find [Siemens] has appropriate solutions for some of their applications."
Moreover, Siemens motors and drives can be applied to an infrastructure without ripping out existing control architectures. But where integration is required, the company has the tools and expertise to do so as well, Rao said in an interview. The company is also leaning heavily on an application-centric approach per the Siemens One program, which is now in its second phase. Phase one consisted of cross-selling products. The aim of phase two is to help Siemens' personnel spot industry trends and develop tailor-made complete solutions.
Kleinfeld, 47, who took Siemens' helm in January, also used the press conference to announce the Fit 4 More program which is designed to help the company's under-performing groups, including Information and Communications and Siemens Business Services, reach margin targets. The four action areas in Fit 4 More include: Performance and Portfolio; Operational Excellence; People Excellence; and Corporate Responsibility. It is based on "solid structures, the right processes and well-honed integration skills," said Kleinfeld.
Kleinfeld most recently served as CEO of Siemens Corp., the company's U.S. division, which he is credited with reinvigorating. "I'll give you my personal commitment today that all parts of the company will be on track within the next 18-24 months," Kleinfeld told the press conference audience, adding that he plans to grow twice as fast as the global GDP. "Thanks to our balanced portfolio, a growth rate double that of the world economy is not only ambitious but also feasible," he said.