Siemens income dragged down by IT and telecom units

Siemens reported sales up around 4 percent year-on-year for the quarter to March 31, but net income fell, dragged down by operating losses in its telecommunications and IT services business units.

Sales for the second quarter of the company’s fiscal year totalled €18.56 billion ($23.97 billion as of March 31, the last day of the period reported), up from €17.79 billion in the same quarter of last year, the Munich-based manufacturer said Wednesday.

The company reported net income of €781 million for the quarter, down from a year earlier, when it reported net income of €1.21 billion. The fall was less dramatic when compared to a year-earlier figure of €807 million excluding one-off items such as a sale of shares in Infineon, its former chip-making subsidiary, the company said.

Siemens’ communications division, which makes equipment for fixed and mobile phone networks as well as mobile phones, posted a loss for the quarter of €19 million, down from a profit of €146 million a year earlier. Sales at the division declined around 5 percent over the year, to €4 billion during the quarter.

The losses and decline in sales in the division were caused by poor sales of mobile phones, Siemens said. The company shipped 9.3 million phones in the quarter, compared to 12.8 million a year earlier. That generated sales of €842 million, down from €1.24 billion last year, and a loss of €138 million, compared to a year-earlier profit of €13 million.

Siemens IT services division, Siemens Business Services, also plunged into the red: it lost €129 million in the quarter on sales of €1.28 billion, compared to a profit of €26 million on sales of €1.12 billion a year earlier. The loss included €63 million in charges for restructuring, including the disposal of its Sintec business.

The company’s other business units, accounting for 72 percent of its sales, were all profitable, the company reported. Siemens also manufactures automation and control systems, logistics systems, power generation and distribution equipment, trains, lighting, car components, and medical systems.