Siemens Financial Services (SFS) has seen a
drop in profit for the latest quarter despite a 50% leap in new
business.

Parent company Siemens, whose financial year
runs 1 October to 30 September, released its third quarter results
which showed the finance and leasing arm of the Munich-based
business profits drop 20% year-on-year.

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The company said the decline is due to an
impairment on its equity stake in a power plant project in the US
due to unexpectedly adverse market conditions.

SFS signed new orders worth €293m in the
period to 30 June 2011 compared to €195m for the same period in
2010 while profit dropped from €112m to €89m.

A spokesperson for SFS said the rise in new
business is the first fruit of a growth initiative and mounting
demand for finance both from Siemens and third party customers.

The drop in profit was also linked to a one
off earnings boost from a large project which led to a higher than
normal profit in the third quarter of 2010. 

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The spokesperson said: “Profitability has not
dropped – it has simply returned to its normal level after this
one-off extraordinary effect.”

Total assets for the division increased 2.6%
from 30 September 2010 to €12.8bn which the company attributed to
growth in the commercial finance business.

The whole group saw new orders grow 20% and a
total revenue increase of 2.4% while profit dropped 47% to
€1.08bn.

Peter Löscher, chief executive of Siemens,
said the company’s operations showed strength in a global economic
environment marked by uncertainties.

He said growth in 2011 was expected to be
solid but flatter than 2010 and, while markets are still robust, he
cited overheating of emerging economies, the Arab Spring,
fluctuating raw material prices and the US and European debt
situation as risk factors.

grant.collinson@vrlfinancialnews.com