German engineering group Siemens AG will have a harder time reaching the 2012 targets it set out in November because of customers' worries about the European debt crisis and pricing pressure in several businesses, the conglomerate's finance chief said on January 10.
"2012 targets remain in place," CFO Joe Kaeser told Reuters in an interview in New York. "The environment has not materially worsened (but) there has been less margin for error in order for us to meet our assumptions that we gave out in November." Asked if Siemens' targets would be harder to reach, he said: "That would be a correct statement."
Kaeser said that revenue growth would likely be at the lower end of the company's projected range of 3-5 percent in 2012. Siemens, a bellwether for the euro zone's largest economy, has forecast flat profit growth for 2012.
"People have been on the sidelines ordering new equipment and new solutions because they didn't know what the outcome would be on the European debt crisis," he said. Kaeser said the company expects the first and second quarters to be sluggish but anticipates a recovery in the second half of the year, helped in part by a recovering US economy.
To reach Siemens' full-year targets, the conglomerate's short-cycle businesses, like industrial automation and parts of its drives business, need to hold up. These businesses are currently meeting expectations. He added that competitors are aggressive on pricing in areas such as medical imaging, renewable energy and power transmission. Separately, Kaeser said he was not surprised that inventories of lighting products were building, after rival Philips Electronics NV said it expected to take charges for inventory that it could not move in a weak consumer lighting market.
Siemens' light bulb unit Osram is performing to expectations though well below its peaks, and the company is "not too eager" to pursue an initial public offering of the unit in the near term. "It's just not the time," Kaeser said. "When the timing is right, we'll renew our approach to get that asset to become a stand-alone company."