Siemens on track after solid performance
Siemens turns to emerging markets to offset slow growth elsewhere.
The results of a company the size and scope of Siemens are always a good test as to market conditions, but with the Eurozone currently balancing on the edge of another financial meltdown this year’s figures are particularly interesting. The fact that the performance of the German-headquartered global giant failed to provide a remedy for the financial gloom drew the ire of many financial commentators, but stripping away the expectations they highlight a solid performance.
In its fiscal fourth quarter, which ended on 30 September, overall sales grew nearly 5 per cent to €20.35bn, but emerging markets rose 8 per cent to contribute €7.235bn to that total. Revenue in the Europe, Middle East and Africa region, by contrast, rose only 3 per cent.
With more than a third of the company’s revenue derived from emerging markets it is cushioned against the stalled growth in the global economy, allowing it to ride out the Eurozone crisis.
“The macroeconomic environment continues to be highly volatile and difficult to assess,” said Siemens CEO Peter Loscher. “The forecasts of experts have become more cautious. However, even the most recent forecasts call for global GDP growth of 3 per cent – in other words, growth roughly at last year’s level.”
It is clear that the global economy is moving at two speeds. The growth forecast for industrial countries is at 1.4 per cent for 2012. For emerging countries it is four times as high, 5.6 per cent, and even higher for the BRIC countries at 6.8 per cent. Loscher acknowledged that the company is already seeing signs of a slowdown among customers.
“Yet it is clear that we are also benefiting from the dynamic growth in emerging countries. There are many places in the world – from Istanbul to Asia and Latin America – where the daily news is not dominated by crisis summits and emergency measures but by growing self-confidence, by successes, and by rising expectations. And all these places are home to Siemens customers and to Siemens. Our growth rates there are above average. Against this backdrop, Siemens will continue to grow faster than the global economy.”
For a company that makes a diversified portfolio of products from trains to renewable energy plants you would expect a varied level of performance and that is certainly true.
Over the year the industry and energy sectors delivered an especially strong performance; both grew new orders at a double-digit rate. The industry sector increased earnings by 36 per cent to €3.6bn, buoyed by the huge order from Deutsche Bahn for ICx trains – the biggest in the history of the company. However, the industry automation and drive technologies divisions also contributed significantly to the success of the sector.
The energy sector increased new order volume too – by 15 per cent to about €34.8bn for the year, despite uncertainty in the nuclear sector post-Fukushima and disappointing performance in renewable energy.
“[With] renewable energy, our expectations have not yet been met in the area of solar thermal power because regulatory conditions have deteriorated and projects delayed,” Loscher said. “However, the progress being made in the first Desertec projects shows this market does have a future. This year, our wind business won its first order for an offshore wind park in China, which is a milestone in our entry into the world’s largest wind energy market.”
The healthcare sector picture is mixed. “The strength of the imaging business, which has been able to maintain its leading market position, contrasts sharply with the operational challenges at the diagnostics business. In the pioneering area of particle therapy, the time is not yet ripe for the broad commercial deployment of this highly innovative technology.”
Healthcare: Driven by innovation
Siemens increased its investment in R&D by €500m in 2011, and over the past decade it has doubled R&D personnel. It also presents awards to its top innovators. One of those honoured in November was Dr Rainer Graumann, who works on medical imaging techniques and surgical navigation systems.
In the past, surgeons carrying out minimally invasive skeletal operations had to laboriously correlate marker points on a previously-prepared image of the patient with corresponding points on the area to be operated on.
Graumann searched for a way to make this task faster and more accurate. Using the instrument he developed, the patient is scanned only as surgery begins. All that is needed is for the patient to be positioned so that the centre of the area to be operated on is exactly at the centre of the imaging device. This distance therefore becomes a known quantity. The reference points of the instruments and of the C-bow X-ray device are captured with a stereo camera, and this data is used to generate constantly updated images of the patient showing the changing positions of the surgeon’s instruments.
The system enables surgeons to position implants, artificial joints and screws. It can also be used in neurosurgery and operations on the face. Graumann is happy to observe surgical procedures in person. “That enables me to see for myself what the surgeons really need,” he says.
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