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Eastern boom fuels Siemens` record results
Published:  01 March, 2005

Last year was the most successful in the history of Siemens` Automation and Drives operation. Its profits rose by 34% to more than €1bn, on sales of €8.83bn (up 5% on 2003), making A&D Siemens` most profitable division. The group`s operating margin of 12.2% (up from 9.6% in 2003) was its best return ever, while orders rose by 6% to €8.98bn. A&D even increased the number of people it employs, by 1,400 to 51,800.

Revealing these figures in Frankfurt this month, Helmut Gierse, president of the A&D group (above), added that 2005 had started well with the first quarter showing an 11% rise in new orders to €2.43bn, and a 5% increase in sales to €2.16bn, compared to the same period in 2004. Gierse declared that he was "more than satisfied" with the results, with operating profits up 19% to €262m, representing a margin of 12.1%.

Much of this growth is coming from the Asia-Pacific region where volumes grew by about 25% last year, driven largely by China, where A&D has sustained double-digit growth for several years. A&D and its joint ventures in China now employ around 2,800 people, and the business already has 44 sales offices there - expected to reach 60 by the end of this year. Half of A&D`s managers in China are now local people.

Siemens is focussing its efforts not only on China, but also on Russia, where it has doubled its market share and tripled its sales in the past five years.

According to Gierse, Siemens A&D has managed to extend its leading position in the global automation market which, he declares, "has remained uncontested for years". In motion control, "we have set impressive benchmarks over the past two years," he adds. Responding to "fierce competitive pressure", Siemens is now developing specific drives for particular industries.

Gierse believes that automation users can no longer achieve productivity gains simply by adopting improved standalone products. They now need "seamless horizontal and vertical integration of information, communication and automation systems" and this is giving rise to trends such as: .

• distributed intelligence and networking;

• increased interaction between production and business processes; and

• the convergence of factory and process automation in hybrid automation, which now represents the largest segment of the automation market.

According to Gierse, other key technology trends driving the automation market are:

• real-time isochronous communication via Ethernet for motion control and other demanding tasks - a chip developed by Siemens for this purpose (and produced by NEC) will be available from May, and the first products to use it will be on show at the Hannover Fair in April;

• wireless communications - Siemens has developed a coaxial-cable-based technology that allows spatially restricted communications with mobile devices via Profinet, and can handle cyclic I/O communications;

• safety systems, which are growing faster than the automation market as a whole, partly because of new standards, and partly because control and bus systems are being upgraded to handle safety;

• component-based automation, which breaks down central architectures into smaller, more flexible, modular parts, allowing automation systems to be modified quickly and easily; and

• RFID (radio frequency identification), which is now extending from previously localised applications to the entire supply chain from raw materials to the end user.

Gierse says he is "moderately optimistic" about the prospects for the A&D business across all markets and regions for the rest of 2005. Although results could be affected by currency fluctuations, he expects to achieve "a sales and profit level similar to that of the past fiscal year".

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