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UPDATE 2-Siemens keeps targets, sees potential acquisitions

Published 12/18/2008, 06:59 AM
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* Siemens says mobility, Osram will help firm reach targets

* CEO sees economic crisis as opportunity for acquisitions

* CEO says company is in a strong financial position

* Shares up 4 percent

(Adds CEO comments)

FRANKFURT/BERLIN, Dec 18 (Reuters) - Siemens AG expects the restructuring of its mobility and Osram units to help its industrial sector reach its fiscal 2008/09 targets and sees the financial crisis as an opportunity to scoop up rivals.

The industrial sector, which generates almost half of Siemens' annual sales, is expected to post flat sales for 2008/09 with an operating margin of 9 to 13 percent, sector head Heinrich Hiesinger said in a presentation for the German engineering conglomerate's investor day in Munich.

Separately, Chief Executive Peter Loescher said the company could use the crisis to scoop up smaller industry players who were weakened by the economic downturn.

Siemens said last month the global credit crunch had made it more challenging for the company to achieve its 2009 targets but did not cut them.

Shares of Siemens rose 4 percent to 51.10 euros by 1116 GMT, the second-biggest gainers in the German blue-chip DAX index, which was up 1 percent.

Companies around the world have postponed or scrapped planned investments to retain cash to tide them over if the economic crisis does not improve soon. Among the hardest-hit industries have been financial services and automotives.

Loescher said Siemens had been well prepared for the crisis, and had reserves of about 7 billion euros, although he said he was surprised by the speed and extent of the economic downturn.

"We're in excellent shape," Loscher said. "We'll use the crisis pro-actively for future-oriented acquisitions."

Purchases would likely be smaller in scope than its VDO business, which it sold to Continental AG for 11.4 billion euros ($16.39 billion) last year, he said at the Foreign Press Club in Berlin on Thursday.

RESTRUCTURING PLANS

Siemens, which said on Monday it would pay just over $1.3 billion to settle bribes-for-business investigations in the United States and Germany, does not expect to face a flood of similar legal action in other countries, Loescher said.

He also said he had not lost a second of sleep over any possible hostile takeover plans rivals might have.

Nonetheless, Siemens is trying to cut its costs to keep up with the competition. It is restructuring its mobility and Osram divisions to boost profitability.

The mobility division could post a profit in the current fiscal year to end-September 2009 on the back of a programme to cut costs by about 1.2 billion euros between 2008 and 2010.

At Osram, Siemens has shut down some plants and cut jobs to boost profitability. It has also shifted its focus to energy-efficient light bulbs and LED lights to tap into demand for alternatives to traditional light bulbs.

Hiesinger said his business's strong order book, which now stood at 17 billion euros, sparked hopes that the company's business could withstand the impact of the global economic crisis next year.

(Reporting by Maria Sheahan and Erik Kirschbaum; editing by Elaine Hardcastle)

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