Siemens profits up 39%, despite problems

Engineering group Siemens today posted a 39% hike in annual profits despite a software fault in a new line of mobile phones.

The German company, which employs around 430,000 people worldwide, also experienced design problems with trams running in a number of European countries.

However, improved performances by 10 of its 13 divisions – including medical solutions and power generation – lifted net income to €3.41bn in the year to September 30.

Siemens said that as well as experiencing a software fault in its new line of handsets, the mobile division suffered competitive pressures which reduced the average selling price of its phones.

This meant the arm posted losses of €152m against profits of €27m last time, despite selling 51.1 million handsets, up from 39.1 million.

The group also spotted technical problems with its Combino tram, resulting in a loss of €434m at the transportation systems division.

Action was currently being taken to solve the problem, but this led to a slow-down in sales.

However, Siemens said its automation and drives, medical solutions and power generation divisions contributed the “lion’s share” of group profits.

Chief executive Heinrich von Pierer described 2004 as a very successful year for the group.

He added: “We are pursuing further operational improvements at our groups, given that factors such as a weakening US dollar and rising commodity prices may make the macroeconomic environment more challenging.”