Siemens more than doubled its third-quarter net income as its communications unit returned to profitability and losses narrowed in its computer services arm, the German electronics and engineering giant said Thursday.
Net income soared 104% to €792 million ($994 million as of June 30, the last day in the period reported) from €389 million in the same period a year earlier.
Contributing to the higher earnings was the group’s communications division, which reported a profit of €3 million, compared with a loss of €81 million a year earlier. But the group’s largest money-maker was again the automation division, with profit up to €396 million from €333 million a year ago.
Third-quarter net revenue rose to €21.2 billion, compared to €18.6 billion a year earlier.
Sales from the communication’s division, which is to be folded into a 50-50 joint venture with Finland’s Nokia, edged up 1% year-over-year to €2.97 billion.
In June, Siemens and Nokia announced plans to merge their telecommunications infrastructure manufacturing operations into a new company, called Nokia Siemens Networks, following two similar consolidation moves in the industry, one by Alcatel and Lucent, and the other by Telefonaktiebolaget LM Ericsson and Marconi.
The decision to carve out the telecommunications business, which has been underperforming for years, is part of Siemens’ reorientation strategy to focus on core growth areas, including factory automation, power generation and automotive systems, said Siemens CEO Klaus Kleinfeld in a Webcast news conference.
Kleinfeld said he is also looking for either a buyer or joint venture partner for the group’s enterprise networks unit, which develops and sells IP networking products, digital phones and communications applications to businesses.
Sales in the enterprise networks unit declined year-over-year, and its losses widened, Siemens said in a statement without providing figures.
Siemens Business Services (SBS) unit, which provides IT services to internal Siemens units and external customers, was able to narrow its losses to €99 million from €109 million a year earlier. The unit’s sales, however, dropped 19% to €1.08 million from €1.33 million.
In December, in move to cut losses, Siemens agreed to sell the product-related services division of SBS to its joint venture partner Fujitsu Siemens Computers BV.
Moving ahead, SBS will focus on serving key business sectors in which Siemens “is strong,” Kleinfeld said. “We want to bring SBS closer to our core sectors.”
Last year, Siemens also agreed to sell its money-losing mobile phone manufacturing unit to Taiwan’s BenQ.
Over the past several years, the Munich manufacturer has spun off several communications and electronics businesses, including its computer manufacturing unit, which it rolled into a joint venture with Fujitsu, and its semiconductor business, which it spun off into an independent company.
The moves mark a slow and painful exodus of one of Europe’s biggest manufacturers from the IT and communications sector, which is being radically reshaped by new low-cost rivals, largely from the Asia-Pacific region.
