Siemens healthcare unit shows profit; company sues former execs

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Siemens hopes to regain bribery losses from the former execs. Source: Sox First  

Siemens today confirmed its business year outlook after reporting a rise in both orders and sales in the company's fiscal third quarter of 2008, despite a net profit drop of 31 percent to €1.42 billion ($2.21 billion), compared to year-ago results.

The company said that new orders jumped by 21 percent to €23.7 billion ($37.29 billion) with sales rising by 10 percent to €19.18 billion ($29.85 billion), compared to the year-ago quarter.

Siemens said that profit for its industry, energy and healthcare units climbed 33 percent to €2.08 billion ($3.23 billion) in the third fiscal quarter of 2008, compared to the same quarter in 2007. In particular, energy and healthcare led growth, with an advance in sales of more than 10 percent, compared to the third fiscal quarter of 2007. The company said that orders for factory-automation gear and power-transmission equipment in Asia, Europe and Africa attributed to these profits and helped counter the impact of a weaker dollar on U.S. sales.

The company attributed its overall drop in net income to the fact that its year earlier net income of €2.07 billion ($322 billion) benefited from “a substantial gain in discontinued operations related to the transfer of the carrier business into Nokia Siemens Networks.”

Regarding fiscal 2008, the company affirmed its full-year outlook, with expectations to achieve a combined Sector operating result of €8 billion to €8.5 billion ($12.4 billion to $13.2 billion) for the year, according to Siemens CEO Peter Loescher.

"We shifted Siemens into a higher gear in the third quarter, reaching important milestones on our reorganization path," said Loescher, who took over the company about a year ago in the wake of a €1.3 billion ($2 billion) bribery scandal.

The third quarter earnings report also followed Siemens' restructuring into three key units–industry, energy and healthcare–as well as new moves by the group to face up to the scandal.

Bribery Scandal

On Tuesday, Siemens announced that it was planning to seek compensation from former top company executives who had failed to tackle the scandal.
The company said it bases its claims on breaches of their organizational and supervisory duties in view of the accusations of illegal business practices and extensive bribery that occurred in the course of international business transactions in the years 2003 to 2006 and the resulting financial burdens to the company.

The claims are being asserted, on the basis of currently available information, against Johannes Feldmayer PhD; Thomas Ganswindt, MD; Klaus Kleinfeld, MD; Edward G. Krubasik, PhD, MD; Rudi Lamprecht; Heinz-Joachim Neubürger; Heinrich v. Pierer, PhD, MD; Jürgen Radomski, MD; Uriel Sharef, MD; and Klaus Wucherer, PhD, MD. The supervisory board of Siemens adopted a resolution to this effect at its meeting on July 29.

In addition, the company said it will also assert claims for damages against former corporate executive committee members Johannes Feldmayer, PhD, and Günter Wilhelm, MD, in connection with payments to Wilhelm Schelsky and his companies.

The eleven former members of the Corporate Executive Committee named above will be given an opportunity to state their positions on the accusations before legal action for damages is taken, according to Siemens.