Tags: Siemens | Dividend | Hike | Robust | Growth

Siemens Plans Hefty Dividend Hike, See Robust Growth

Thursday, 11 Nov 2010 12:49 PM

Siemens, a bellwether of the euro zone's largest economy, signaled its confidence on Thursday by proposing a sharp rise in its full-year dividend and forecasting growth next year.

The company, whose products range from high-speed trains and wind turbines to hearing aids and light bulbs, is planning a dividend of 2.70 euros ($3.71) per share, the first increase since 2007. The dividend has been flat at 1.60 euros per share every year since then.

The new payout to shareholders is above the highest forecast of 2.40 euros in a Reuters poll of analysts and exceeds the poll average by nearly half.

"With our new dividend policy, we're providing long-term investors with an additional incentive to invest in Siemens," Chief Executive Peter Loescher said on Thursday as Europe's biggest engineering conglomerate released third-quarter earnings.

Siemens, which has never published a dividend policy before, said on Thursday its future dividend payout ratio will be 30-50 percent of net income.

"The dividend signals confidence in the future. It also means the company will now link dividend payment with profit, which means it can also be cut in the future," said analyst Theo Kitz of Merck Finck.

Industry Boosts

The company said operating profit at its three core businesses fell to 1.1 billion euros in the fiscal fourth quarter, down 45 percent from the year-earlier period. The fall was still less than the average forecast of a 59 percent decline.

Siemens expects profit from continuing operations in the current fiscal year to September 2011 to grow by 25-35 percent, with new orders improving significantly and organic sales returning to moderate growth.

Investor attention shifted to the dividend and the company's new medium-term targets following Siemens' trading update for the July-September period, released on Sept. 27.

Quarterly growth was driven by its bread-and-butter industry sector, whose industry automation, drives technology and other short-cycle units profited from factories cranking up production in Asia and Germany.

It said it expects emerging markets to expand considerably faster in the years ahead than their industrialized counterparts and to contribute a growing proportion of sales.

Emerging markets account for 30 percent of revenue now, compared with 19 percent five years ago.

Siemens is the last company to report in its sector, following consensus-busting quarterly results of Swiss rival ABB, which said it expected the positive trend in short-cycle business to continue in 2011.

Siemens trades at 12.8 times its estimated 12-month forward earnings, a discount to ABB's multiple of 15.5, GE's 13.3 and Rockwell's 17.3, according to Thomson Reuters' Starmine, which weights analysts' forecast according to their track record.

© 2017 Thomson/Reuters. All rights reserved.

   
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Siemens, a bellwether of the euro zone's largest economy, signaled its confidence on Thursday by proposing a sharp rise in its full-year dividend and forecasting growth next year. The company, whose products range from high-speed trains and wind turbines to hearing aids...
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2010-49-11
Thursday, 11 Nov 2010 12:49 PM
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