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Siemens says first-quarter profit fell 16 percent due to EU fine

Siemens says first-quarter profit fell 16 percent due to EU fine

Siemens AG reported Thursday that its first-quarter net profit fell 16 percent due to a euro423 million (US$550.11 million) fine from the European Union, but that its underlying earnings were improving.
The Munich-based industrial conglomerate company said net profit in the three months through Dec. 31 fell to euro788 million (US$1.02 billion) from euro939 million in the same period the year before. First-quarter sales gained 6 percent to euro19.07 billion (US$24.8 billion).
The fine arose from a European Commission antitrust investigation, which penalized Siemens for price-fixing among providers of a gas-insulated switchgear in the power transmission and distribution industry.
Excluding the fine, Siemens' net profit was above the euro962 million (US$1.3 billion) forecast by analysts polled by Dow Jones Newswires, and investors sent the shares up 4.9 percent to euro81.70 (US$106.21).
Investor sentiment was also buoyed by the company's plans to hold an initial public offering for a minority state in its Siemens VDO auto parts business.
"In terms of the underlying performance of our business, the first quarter got the fiscal year off to a strong start," said Siemens CEO Klaus Kleinfeld. "Order growth was particularly satisfying, considering that the prior-year basis of comparison was already quite high."
The share rise was a bit of good news as company officials faced the tough job of explaining the EU fine and a corruption investigation to several thousand shareholders gathered in Munich's Olympia Hall. Munich prosecutors are looking into allegations of illegal payments to win telecom contracts overseas.
Salary increase of 30 percent for the management team have also garnered negative publicity.
The shareholders will vote on approving the work of the executive team _ largely a formality, but also a chance for investors to register disapproval by withholding their votes.