German conglomerate Siemens AG sees room for further profit margin improvements at its VDO Automotive unit, although the business is already bringing in the targeted returns, chief financial officer Heinz-Joachim Neubuerger told an analyst conference on Friday.
Dow Jones Newswires said VDO Automotive, which supplies components such as brake and fuel systems, posted a 6.6% operating profit margin in fiscal 2005, ahead of the 5%-6% target range under Siemens’ efficiency program dubbed Fit4More, that mandates all units to achieve their margin targets – of between 4% and 13% – by April 2007 at the latest.
Despite difficult times for the motor industry, VDO Automotive posted a 12% rise in operating profit for fiscal 2005, which ended on 30 September. The company saw sales rise 6.7% during the year to EUR9.6bn. However, operating profit dipped 7.5% in the fourth quarter to EUR148m, due to higher investments, the report said.
Dow Jones said Neubuerger told analysts there was room for more efficiency in the unit’s investment strategy including what it spends on research and development.
Siemens chief executive Klaus Kleinfeld reportedly added added that he also saw room for further profit margin improvement at the company’s automation and drives division, which has also met its margin targets. He didn’t elaborate, Dow Jones noted.