Industrial engineering giant Siemens on Tuesday said its net profit for the last three months of 2011 fell 17 percent to 1.457 billion euros ($1.89 billion), as a faltering economy and delays in orders took a tool on the company.

Siemens released its profit figures for the first quarter of the fiscal year on Tuesday. Although sales rose 2 percent to 17.9 billion euros, new orders in the three-month period dropped 5 percent to 19.81 billion euros.

Siemens Chief Executive Peter Löscher said the results showed that financial market turmoil stemming from Europe's debt crisis "have left their mark on the real economy."

"Public budgets are increasingly strained, and anxiety about credit bottlenecks is dampening willingness to invest so that global economic growth is leveling off," he said at a news conference webcast from the company's headquarters in Munich on Tuesday.

Project delays

Löscher added that delays in delivering new high-speed trains to German rail operator Deutsche Bahn had led to a loss of 69 million euros in potential revenue.

Also weighing on profits were higher research and investment costs and pricing pressures from stiff competition in its wind energy business.

"The golden era of double-digit growth rates in this sector is over," he said, adding that losses for Siemens there would remain a "one-off incident".

New orders from China slumped strongly in the first quarter, said Siemens Chief Financial Officer Joe Kaeser. He described the 17-percent drop as "a considerable cooling of short-term business in the region."

Positive outlook

Löscher said the economic environment would remain difficult in the second quarter, in which he saw a "mild recession" looming in Europe. Siemens, however, stayed with its outlook for income of 6 billion euros from continuing operations.

Expecting a pickup in the second half of the year, he said that "nevertheless, we have to work hard to reach our goals."

Analysts said the company's results from its operational business were clearly disappointing.

"[Lösche's] optimism for the second half of 2012 is based on an improvement of investor confidence. I don't see where this should come from," Karsten Oblinger, an analyst for the DZ bank, told Reuters news agency. "I wouldn't bet on a rise of Siemens shares this year."

Author: Uwe Hessler (AP, Reuters, dpa)
Editor: Andrew Bowen