Germany’s Siemens beat analysts’ expectations with higher sales and operating profit and posted a 4 percent rise in new orders on Thursday, sending its shares up 4 percent.
But net profit, dented by a cartel fine from the European Commission, fell 16 percent to 788 million euros in the fiscal first quarter to end-December, well below an average forecast of 998 million euros in a Reuters poll of 14 analysts.
The profit included a negative effect of 423 million euros from the cartel fine, but also a positive effect from a switch to IFRS accounting which lifted corporate treasury earnings by 358 million euros.
Investors focused on operating profit which rose 51 percent to 1.63 billion euros, well above the average forecast of 1.46 billion euros, sending its shares up 4 percent to 81 euros via electronic trading system Instinet.
“The numbers were very good if you disregard the cartel fine, particularly the order intake was better than expected,” said a trader.
Orders rose to 24.582 billion euros ($31.97 billion), from an exceptionally strong year-ago quarter, driven by Siemens’ industrial units Power Transmission and Distribution, Power Generation and Industrial Solutions and Services, Siemens said.
Chief Executive Klaus Kleinfeld said in a statement he “firmly believed” all the group’s divisions would meet profitability targets this quarter.
Despite investigations into corruption at the company that are likely to produce a stormy shareholder meeting later on Thursday, the company pressed on with reshaping its portfolio as it announced a major acquisition and a disposal on Wednesday.
Siemens said it would buy U.S. industrial design software maker UGS Corp. for $3.5 billion to beef up its factory-automation unit A&D and that it planned an initial public offering of part of its automotive unit, VDO which has annual sales of around 10 billion euros and a 6-percent operating profit margin.
Kleinfeld told reporters on Thursday he wanted to float substantially more than 25 percent of VDO, but less than 50 percent as he wanted to keep a majority of the shares.
Chief Financial Officer Joe Kaeser told journalists that “organic growth must have priority,” adding that the company would be occupied with integrating recent large acquisitions.
Fiscal first quarter sales rose 6 percent to 19.07 billion euros, or 10 percent corrected for the impact of acquistions and a cheaper dollar versus the euro, and above the average analyst forecast for 18.68 billion euros.
Siemens’ healthcare unit, Medical, was once again the group’s most profitable during the first quarter, posting an operating profit margin of 14.5 percent. A&D’s profit margin was 13.3 percent, while VDO’s slipped to 6.0 percent from 6.4 percent a year earlier.
IT service unit SBS posted its first profit for two years, of 24 million euros.
Institutional shareholder advisory body ISS added its voice to those of retail shareholder associations on Wednesday in calling for Siemens investors to withhold their approval of Siemens’ boards at the annual meeting, which starts at 0900 GMT.