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.
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.
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.