Siemens reports profit growth as CEO plans departure

One day after announcing his unexpected decision to step down, Siemens’ embattled CEO Klaus Kleinfeld could put on a smile Thursday morning to discuss the company’s higher sales and earnings.

Kleinfeld said all units of the German engineering electronics company either met or beat their profit targets in its fiscal second quarter.

Late Wednesday, the CEO told the company’s supervisory board that he would no longer be available for a renewal of his contract, which expires Oct. 1.

“It wasn’t an easy decision but it was the right one,” Kleinfeld said during a news conference to announce Siemens’ financial results. “The company needs to move ahead.”

His resignation came six days after Heinrich von Pierer, who preceded Kleinfeld as CEO, quit as chairman of the supervisory board to help Siemens return to “calmer waters,” as he put it.

The long-time Siemens executives have been driven out of the company by a bribery scandal that has caught the attention not only of German investigators but of the U.S. Securities and Exchange Commission and Department of Justice as well.

Both men have denied any wrongdoing.

In his two-year run as Siemens CEO, Kleinfeld cut more than 7,000 jobs and moved the company away from low-margin manufacturing areas, such as telecoms equipment, computers and chips, to areas viewed as potentially more profitable, including factory automation, power generation and automotive systems.

“When I started in January 2005, one third of Siemens’ business was in a difficult condition,” Kleinfeld said. “Today, Siemens is in much better shape and that’s something I can be proud of.”

Under his command, Siemens rolled its telecoms networking business into a joint venture with Nokia and literally gave away its money-losing mobile phone manufacturing business to Taiwan’s BenQ. The mobile phone venture has since filed for bankruptcy.

Siemens’ net income for its fiscal second quarter rose 36 percent to €1.3 billion ($ 1.7 billion as of March 31, the last day in the period being reported) on revenue of €20.6 billion, up 10 percent year on year.

Siemens Business Services (SBS), the company’s IT services unit, posted a profit of €63 million on revenue of €1.4 billion, compared to a loss of €199 million in the same period a year ago.

In the next quarter, the SBS results will be rolled into a new division, Siemens IT Solutions and Services (SIS), which includes the entities Program and System Engineering, Siemens Information Systems, Development Innovation and Projects and Business Innovation Center.