German engineering company Siemens said Wednesday its second quarter net profit fell by almost two thirds as sizable writedowns weighed on earnings.
The company's profit slumped to €1.02 billion ($1.34 billion) in the first three months of 2012, its fiscal second quarter, from €2.84 billion ($3.74 billion) the year before. The fall came as it booked a €640 million writedown on its stake in its NSN communications division, and charges of €278 million in its power transmission division.
Last year's equivalent profit had also been flattered by a €1.5 billion one-time gain from the sale of its stake in nuclear utility joint venture Areva NP.
Siemens CEO Peter Loescher said the second quarter was difficult and remained below the firm's own expectations as incoming orders slowed down.
Though Siemens expects "moderate organic revenue growth" for its fiscal 2012, the company lowered its profit outlook from €6 billion to a range of €5.2 to €5.4 billion as it anticipates further charges in its energy transmission business because of delayed offshore wind power projects.
A more detailed look at the results shows that the Munich-based firm, which produces a wide array of products, including power plants, windmills, trains and white goods, made revenues of €19.3 billion in the quarter, up 9 percent from the year before.
Profit for its energy division slumped on the year from €2.4 billion to €573 million, largely because of the sale of the Areva NP stake. However, the company's expanding renewables business contributed more to the sector's earnings this year, up from €48 million to €112 million.
The offshore wind market — a segment in which Siemens considers itself to be a market leader — in Germany is expected to grow rapidly as the country is set to abandon nuclear power within ten years. But projects in the North Sea suffer delays due to regulatory and feasibility reasons, with the connection to the mainland power grids remaining a major challenge.
Siemens' quarterly net profit from continuing operations slumped from €3.17 billion to €1.05 billion.