Siemens expects medical restructuring

November 20, 1996

Add Siemens to the list of European companies planning to restructuretheir medical divisions. The German vendor announced this monththat it intends to retool its Medical Engineering Group to cometo grips with changes in healthcare in two major markets,

Add Siemens to the list of European companies planning to restructuretheir medical divisions. The German vendor announced this monththat it intends to retool its Medical Engineering Group to cometo grips with changes in healthcare in two major markets, theU.S. and Germany.

The announcement came as Siemens released year-end financialresults that indicated that the company enjoyed a healthy fiscal1996, with both revenues and profits up. Siemens warned, however,that it expected net income to be flat in 1997 due to decliningearnings in the firm's components segment, as well as an expectedrestructuring in the Medical Engineering Group.

"Earnings in the Medical Engineering Group were affectedby ongoing cost-cutting measures in the healthcare industry, particularlyin Germany and the U.S., and by sharply eroding prices,"the company said. "Additional productivity-enhancing measurescouldn't compensate for these factors."

Siemens has not yet released details on how it will restructurethe Medical Engineering Group, although it may give more informationat the upcoming Radiological Society of North America meeting,according to a spokesperson for the vendor's Siemens Medical SystemsU.S. subsidiary in Iselin, NJ.

For the year, Siemens reported revenues of 94.2 billion deutschemarks ($62.08 billion), up 6% compared with 88.8 billion DM ($58.52billion) in 1995. Net income before extraordinary items stoodat 2.49 billion DM ($1.64 billion), compared with net income of2.08 billion DM ($1.37 billion).

The medical group reported sales of 7.1 billion DM ($4.68 billion),up 4% compared with revenues of 6.8 billion DM ($4.48 billion)in fiscal 1995.