Siemens feels chill of cooling global economy

Although still making a profit, German engineering giant Siemens has reported worse than expected earnings for the second quarter of 2012. More worrying, however, is a sharp drop in new orders. German industrial conglomerate Siemens reported net earnings of 823 million euros ($996 million) in the months April through June - up from 462 million euros in the same quarter a year ago, but less than the 1.29 billion euros expected by analysts polled by FactSet. Siemens, which is based in Munich, Germany, said that revenue rose to 19.54 billion euros from 17.84 billion in the second quarter of 2011 - a 10 percent increase, which it said resulted from a solid order backlog and positive currency effects. However, orders were drying up, said Siemens Chief Executive Officer Peter Loescher when he released the latest figures Thursday, warning that it would be "more difficult" for Siemens to meet its full-year targets. "We see growing reluctance among our customers regarding capital expenditures," he said, adding that the "deceleration of the world economy" had increased in recent months. As a result, new orders for the firm's power plants, machines and vehicles declined by 23 percent in the second quarter, with orders for the firm's renewable energies business having dropped the steepest at minus 66 percent. Siemens Financial director Joe Kaeser said the problem with the renewables business was that "where there is sun there is no money," in a reference to the sun-rich but debt-laden countries of southern Europe. In addition, Siemens announced that the planned listing of the light-bulb maker Osram was "very unlikely" due to current financial market turmoil, but said it planned to publicly list Osram via a spinoff to shareholders. In spite of its problems, CEO Loescher said Siemens still expected "moderate organic revenue growth" for the whole of 2012, adding, however, that reaching the target of 5.2 billion euros in income had become "clearly more ambitious."