German engineering group Siemens today set out ultra-ambitious sales and earnings targets after reporting that operating profit more than doubled in the final quarter to €1.99bn from €749m.
Peter Loescher, the new chief executive, said sales would grow twice as fast as the rate of global growth, implying annual increases of around 8-9%. Profits would increase at twice the rate of sales growth, he said, implying annual rises of close to 20%.
Siemens, hit by a series of investigations and court cases into bribery and corruption and the departure of senior executives, including former CEO Klaus Kleinfeld, is trying to win back investor confidence. Last night it said it would buy back €10bn worth of shares between now and 2010.
It is the biggest share buy-back in German history and equivalent to 11.5% of the company, which is valued at around €90bn. The group booked €11.4bn from selling its VDO auto components business, spending half of that on a US medical technology business, and has generated large amounts of cash.
Mr Loescher, who is trimming the group’s business units into three core divisions of healthcare, power generation and automation, said all units had hit their profit margin targets and were producing strong free cash flow.
New orders in the fourth quarter rose 21% to €21.3bn while sales rose 9% to €20.2bn. The group is raising its full-year dividend from €1.45 to €1.60.
Siemens made a net loss of €74m in the quarter because of a €1bn tax cost related to the VDO sale to Continental, the Gerrman tyre-maker, and a €201m fine following a bribery investigation.