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For a survey of  Siemens shareholder voting inclinations and criteria, conducted specifically to guide management communications relating to proposals being presented at the annual meeting reported below, see

For subsequently reported voting results of the meeting, see

For an earlier version of the article below, see January 26, 2010 Financial Times: "Siemens pledges further cost cuts."


Financial Times, January 26, 2010 article


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Siemens, Europe’s largest engineering company, lifted operating sector profit by 11 per cent to €2.3bn in the first quarter, in spite of a revenue drop of 8 per cent to €17.4bn, helped by cost cuts and a shift into more higher-margin service businesses.

Siemens Q1 2010 results
Sales Net profit Earnings per share Dividend
€17.4bn €1.531bn €1.70 -
↓8% ↑ 24% €1.43 in 2008 -

The German industrial group added to a more positive sentiment in the industrial sector when it said orders, which fell 11 per cent to €19bn year-on-year, had risen slightly when compared with the last quarter of the previous fiscal year.

It came after main rival General Electric had displayed an optimistic medium-term outlook and as earnings by Philips Electronics easily beat investors’ expectations on rising demand for televisions and lighting.

However Peter Löscher, Siemens chief executive, added a much more cautious note when he said “the crisis is not over yet”.

“It will take a long time until we will come back to the old level [before the crisis has started]. I do not believe we have seen the end of volatility and uncertainty,” Mr Löscher said.

The Austrian-born chief executive vowed to slash costs further by cutting jobs at several German sites of the industry business of the group.

The sector underperformed in recent times and spurred calls from analysts and investors for a further restructuring.

Mr Löscher said the group would undertake “punctual measures at single locations” of the sector, adding that details would only be made public after talks with the works council this week.

Siemens launched a programme to slash administrative and sales costs two years ago, which yielded €2bn in savings in the past fiscal year and helped to lift the company’s profit higher in the first quarter, in spite of a fall in revenues and orders.

“The actions we took at a very early stage are now cushioning us from the ongoing repercussions of the global recession,” said Mr Löscher.

Net profit increased 24 per cent to €1.531bn, while earnings per share increased to €1.70 from €1.40 in the year before.

Joe Kaeser, chief financial officer, reiterated the company’s outlook for the full fiscal year. Germany’s largest engineering company expects an operating profit in its three sectors – energy, healthcare and industry – of between €6bn and €6.5bn.

“It is clear that after the good first quarter it has become easier to reach the forecast for this year,” said Mr Kaeser. He said Siemens would review the forecast for 2010 after the second quarter.

The sector profit in the first three months already accounted for more than a third of Siemens’ full-year aim for 2010.

Analysts showed delight about the first quarter results. “Profit numbers surprised positively across most divisions,” Martin Prozesky at Bernstein Research said.

At the annual general meeting, international and domestic investors questioned elements of Siemens’ pay system for failing to include a longer term perspective and for a clause that grants executives a pay-off in case of a takeover of the company.

Hans Hirt, head of corporate governance at Hermes, the UK pension fund manager, urged Siemens to change the payment system of its supervisory board members, which includes a profit-dependent bonus of more than 50 per cent.

“A success-oriented payment can curtail the objectivity and thus the control function of the supervisory board,” Mr Hirt said.

Gerhard Cromme, Siemens’ chairman, said the engineering group would further review its present compensation system while taking into account feedback from investors and shareholder representatives.

“We will comprehensively examine the relationship between fixed and variable compensation components,” he said.

Siemens is one of the first German blue-chip companies where shareholders can cast a non-binding vote on executive pay, following a new regulation that brings to company in line with the UK and some other European countries.

Mr Cromme said he hoped that in three or four years the remunerations systems at German companies would have improved to the point that shareholders would no longer have to criticise them.

© Copyright The Financial Times Ltd 2010.



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