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Restructuring helps Siemens clock Rs 60 m net - Views on News from Equitymaster
 
 
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  • Jan 29, 2000

    Restructuring helps Siemens clock Rs 60 m net

    Engineering major, Siemens has recorded net profit of Rs 56.9 m in 1QFY2000, compared to a loss of Rs 222.9 m in the corresponding quarter last year.
    (Rs m) 3QFY2000 3QFY1999 Change
    Net Sales 2,276 1,649 38.0%
    Other Income 105 32 227.5%
    Total Expenditure 2,235 1,715 30.4%
    Interest 1 93 -99.0%
    Depreciation 82 89 -7.1%
    Profit before Tax 64 230 -72.1%
    Tax 7 8 -1.3%
    Profit after Tax/(Loss) 57 -223 -126.0%
    Net profit margin (%) 2.5% -13.5%  

    The dramatic change in the company's fortunes can be attributed to the major restructuring drive which it undertook last year to stem losses. In 1QFY2000, the company's sales jumped 38.4% to Rs 2.2 bn. The company recorded net profit of Rs 56.9 m after posting loss of Rs 222.9 in 1QFY1999.

    Improved net profit margins can be attributed to a sharp fall in interest burden to Rs 0.9 m from Rs 93.0 m last year. Depreciation was also down from Rs 85.5 m last year to Rs 82.2 m.

    According to news reports in a leading financial daily, the company's order books position shows new orders worth Rs 2.4 bn - a 30% rise over last year.

    The company is bullish about its prospects in infotech (IT) after spinning off the business into a separate subsidiary. The telecom business is also expected to propel growth.

    Market view:
    Analysts are looking at Siemens favourably after its restructuring efforts. They have flagged a BUY on the company given the potential of its IT and telecom businesses.

     

     

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