07.23.08
$14 Billion ($103B total)
Peter Löscher, President and CEO, Siemens AG
Jim Reid-Andersen, CEO, Siemens Healthcare
Klaus P. Stegemann, CFO, Siemens Healthcare
Heinrich Kolem, CEO, Customer Solutions Group for Siemens
Medical Solutions USA
Bernd Montag, CEO, Siemens Healthcare, Imaging and IT
Donal Quinn, CEO, Siemens Healthcare, Diagnostics
According to Siemens, its broad product portfolio provides answers to the “world’s toughest questions confronting industry, energy, the environment and healthcare.”
That may be the case, but judging by the company’s bottom-line growth for fiscal 2007 (ended Sept. 30), Siemens also may have the answer when it comes to financial performance.
Overall company revenue (the company had six main business areas in fiscal 2007: Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting) increased 9% to $103 billion, while net income increased 21% to $5.6 billion. Though net income expanded, according to company officials, it was hindered by substantial corporate costs associated with ongoing legal trouble. Profit across all geographic areas increased by double digits—led by Europe (excluding Germany), which grew by 34%. Research and development spending also increased—by 9.6%—and the company’s medical division represented 31% of total R&D expenditure, up from 28% in 2006.
For Siemens Medical Solutions—now called Siemens Healthcare as part of a reorganization begun this year—revenue rose 20% to $14 billion, primarily as a result of the acquisitions in in-vitro diagnostics, the company said. The profit picture for the company (which provides diagnostic and therapeutic technologies, including imaging and laboratory diagnostics, therapy and healthcare information technology solutions), while rosy, was impacted by cuts to imaging payments by the US government. Profit for Siemens Healthcare, which has US headquarters in Malvern, PA, increased substantially (34%) to reach $1.9 billion.
In 2007, Siemens created a new Diagnostics division—rolling in recent diagnostics acquisitions—as part of a targeted strategy to create an integrated diagnostics company by combining the entire imaging diagnostics, laboratory diagnostics and clinical IT value chain under one corporate umbrella. During fiscal 2007, Siemens announced a significant addition to its Diagnostics group’s portfolio (the deal closed during the first quarter of fiscal 2008). Dade Behring, Inc., a leading clinical laboratory diagnostics company, was purchased for approximately $7 billion.
“Complementing last year’s acquisitions of Diagnostic Products Corporation and Bayer Diagnostics, this transaction positions Siemens as a leader in the highly attractive and rapidly growing market for laboratory diagnostics,” former President and CEO Erich Reinhardt said at the time. “The implementation of integrated IT and clinical solutions from Siemens will help improve workflow efficiency throughout the healthcare enterprise, from admissions and administration to the laboratory and the radiology department. This will enable our customers to increase the quality of patient care while simultaneously reducing costs.”
In May 2008, Donal Quinn was named the new head of Siemens’ Diagnostics group, succeeding Jim Reid-Anderson, who became the new CEO of Siemens Healthcare that month following the resignation of Reinhardt in the wake of legal problems at the company. Both Reid-Anderson and Quinn had worked at Dade Behring.
Reinhardt resigned his position as board member and CEO of Siemens Healthcare in April this year. His departure is related to what the company called “compliance violations” and “unacceptable behavior” by the former Siemens Medical Solutions group relating to internal controls and the accuracy of documentation. Reinhardt was not accused of any wrongdoing and will continue to serve as a consultant to the company in the short term. Reinhardt took over as head of the Medical Solutions Group in 1994.
The restructuring in the Healthcare division was part of a much broader corporate cleanup. Last year, an internal investigation conducted by a law firm hired by the company revealed evidence of bribery and other corporate improprieties within Siemens, which resulted in a number of resignations and dismissals across multiple business units. Evidence of bribery goes back to the year 2000.
As part of the company’s restructuring, Siemens brought on board a new CEO, Peter Löscher, who took over last July. He came from pharmaceutical giant Merck & Co., Inc. and is the first CEO in Siemens’ 160-year history to be brought in from outside the company. The board felt an outsider would be better equipped to initiate a thorough cleanup and recast the company’s image.
The company’s businesses were broken down into three broad divisions covering industry, energy and healthcare beginning in January this year. Löscher also put the leaders of those three sectors onto the central managing board in Munich, ending a system in which a leader of a major business had his or her own managing board and reported to Munich headquarters without being based there. Siemens officials say the old way allowed corruption to spread and inhibited accountability.
In October 2007, a German court fined Siemens $306 million in connection with bribery activities in its communications equipment business, which it has sold off or folded into joint ventures over the last two years. In the United States, the Department of Justice and the Securities and Exchange Commission have begun investigations.
For the first six months of 2008 (ended March 31), Siemens Healthcare reported $8.5 billion in revenue (approximately 20% improvement compared with the same period last year) and $1.1 billion in profit (roughly a 6% gain over the first half of FY07). Profit margin was “strongly affected” by integration costs associated with the acquisition of Dade Behring, the company reported. Some of those costs, however, were offset by new orders that rose 10% year-over-year in the second fiscal quarter. Imaging and IT business continued to deliver solid profitability despite increasing challenges in market conditions, officials said.
One way the company hopes to offset any future losses is by cutting jobs. In July, parent company Siemens AG announced it would cut 16,750 jobs, or 4.2% of its global workforce, to streamline operations and save approximately $2 billion in costs. The company plans to consolidate its businesses from 1,800 separate legal entities to fewer than 1,000.
KEY EXECUTIVES:
Peter Löscher, President and CEO, Siemens AG
Jim Reid-Andersen, CEO, Siemens Healthcare
Klaus P. Stegemann, CFO, Siemens Healthcare
Heinrich Kolem, CEO, Customer Solutions Group for Siemens
Medical Solutions USA
Bernd Montag, CEO, Siemens Healthcare, Imaging and IT
Donal Quinn, CEO, Siemens Healthcare, Diagnostics
NO. OF EMPLOYEES:
49,000 (480,000)GLOBAL HEADQUARTERS:
Munich, GermanyAccording to Siemens, its broad product portfolio provides answers to the “world’s toughest questions confronting industry, energy, the environment and healthcare.”
That may be the case, but judging by the company’s bottom-line growth for fiscal 2007 (ended Sept. 30), Siemens also may have the answer when it comes to financial performance.
Overall company revenue (the company had six main business areas in fiscal 2007: Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting) increased 9% to $103 billion, while net income increased 21% to $5.6 billion. Though net income expanded, according to company officials, it was hindered by substantial corporate costs associated with ongoing legal trouble. Profit across all geographic areas increased by double digits—led by Europe (excluding Germany), which grew by 34%. Research and development spending also increased—by 9.6%—and the company’s medical division represented 31% of total R&D expenditure, up from 28% in 2006.
For Siemens Medical Solutions—now called Siemens Healthcare as part of a reorganization begun this year—revenue rose 20% to $14 billion, primarily as a result of the acquisitions in in-vitro diagnostics, the company said. The profit picture for the company (which provides diagnostic and therapeutic technologies, including imaging and laboratory diagnostics, therapy and healthcare information technology solutions), while rosy, was impacted by cuts to imaging payments by the US government. Profit for Siemens Healthcare, which has US headquarters in Malvern, PA, increased substantially (34%) to reach $1.9 billion.
In 2007, Siemens created a new Diagnostics division—rolling in recent diagnostics acquisitions—as part of a targeted strategy to create an integrated diagnostics company by combining the entire imaging diagnostics, laboratory diagnostics and clinical IT value chain under one corporate umbrella. During fiscal 2007, Siemens announced a significant addition to its Diagnostics group’s portfolio (the deal closed during the first quarter of fiscal 2008). Dade Behring, Inc., a leading clinical laboratory diagnostics company, was purchased for approximately $7 billion.
“Complementing last year’s acquisitions of Diagnostic Products Corporation and Bayer Diagnostics, this transaction positions Siemens as a leader in the highly attractive and rapidly growing market for laboratory diagnostics,” former President and CEO Erich Reinhardt said at the time. “The implementation of integrated IT and clinical solutions from Siemens will help improve workflow efficiency throughout the healthcare enterprise, from admissions and administration to the laboratory and the radiology department. This will enable our customers to increase the quality of patient care while simultaneously reducing costs.”
In May 2008, Donal Quinn was named the new head of Siemens’ Diagnostics group, succeeding Jim Reid-Anderson, who became the new CEO of Siemens Healthcare that month following the resignation of Reinhardt in the wake of legal problems at the company. Both Reid-Anderson and Quinn had worked at Dade Behring.
Reinhardt resigned his position as board member and CEO of Siemens Healthcare in April this year. His departure is related to what the company called “compliance violations” and “unacceptable behavior” by the former Siemens Medical Solutions group relating to internal controls and the accuracy of documentation. Reinhardt was not accused of any wrongdoing and will continue to serve as a consultant to the company in the short term. Reinhardt took over as head of the Medical Solutions Group in 1994.
The restructuring in the Healthcare division was part of a much broader corporate cleanup. Last year, an internal investigation conducted by a law firm hired by the company revealed evidence of bribery and other corporate improprieties within Siemens, which resulted in a number of resignations and dismissals across multiple business units. Evidence of bribery goes back to the year 2000.
As part of the company’s restructuring, Siemens brought on board a new CEO, Peter Löscher, who took over last July. He came from pharmaceutical giant Merck & Co., Inc. and is the first CEO in Siemens’ 160-year history to be brought in from outside the company. The board felt an outsider would be better equipped to initiate a thorough cleanup and recast the company’s image.
The company’s businesses were broken down into three broad divisions covering industry, energy and healthcare beginning in January this year. Löscher also put the leaders of those three sectors onto the central managing board in Munich, ending a system in which a leader of a major business had his or her own managing board and reported to Munich headquarters without being based there. Siemens officials say the old way allowed corruption to spread and inhibited accountability.
In October 2007, a German court fined Siemens $306 million in connection with bribery activities in its communications equipment business, which it has sold off or folded into joint ventures over the last two years. In the United States, the Department of Justice and the Securities and Exchange Commission have begun investigations.
For the first six months of 2008 (ended March 31), Siemens Healthcare reported $8.5 billion in revenue (approximately 20% improvement compared with the same period last year) and $1.1 billion in profit (roughly a 6% gain over the first half of FY07). Profit margin was “strongly affected” by integration costs associated with the acquisition of Dade Behring, the company reported. Some of those costs, however, were offset by new orders that rose 10% year-over-year in the second fiscal quarter. Imaging and IT business continued to deliver solid profitability despite increasing challenges in market conditions, officials said.
One way the company hopes to offset any future losses is by cutting jobs. In July, parent company Siemens AG announced it would cut 16,750 jobs, or 4.2% of its global workforce, to streamline operations and save approximately $2 billion in costs. The company plans to consolidate its businesses from 1,800 separate legal entities to fewer than 1,000.