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November 26, 1997updated 03 Sep 2016 8:33pm

SIEMENS NIXDORF UK SEES REVENUES UP; PROFITS STILL MODEST

By CBR Staff Writer

Siemens Nixdorf Information Systems Ltd, the UK arm of the German computing hardware and services company, has aggressively grown its revenues this year, which are up by 40%, but the bottom line is still short of group targets. While Siemens Nixdorf is notoriously reticent about revealing any of its figures (as a subsidiary of Siemens AG it doesn’t have to) the bare essentials released by the UK division for the year ended September 30 claim a profit of 7.0m pounds (up from 2.1m pounds) on turnover up 40% at 354m pounds. Orders are also up by 70% to 415m pounds the company said. However, without audited figures, it’s impossible to tell by how much the intercompany balances within the Siemens group have contributed to the slim margins. The 7m pounds of profit represents a net margin of just 2% and UK managing director, Richard Bearpark, admits that this isn’t the kind of serious money SNI should be aiming for. The target is for a 5% return on sales with revenues of 700m pounds by the year 2000. If the current growth rate of 40% can be maintained, the target is achievable, but it’s more than likely that margins will remain dubiously thin. The Products and Technology Services division will continue to push hard for market share in PCs and servers, while the Solutions and Business Services division is involved in partnering up for long term outsourcing deals which have yet to reach the pay back phase of their life cycle. The growth in revenues over the year has been aided by a tripling of PC units shipped and a 50% rise in server sales. A year ago, SNI Ltd bucked the industry trend for direct sales and chose instead to partner with resellers. The results have been positive and immediate but the PC division has fallen short of its goal of entering the UK top 10 by the end of this year. The longer term results from this strategy will be interesting to watch, especially in the high street market where the Siemens Nixdorf name is relatively unheard of. Meanwhile, the company’s electronic point of sale systems are going from strength to strength with the UK’s biggest food retailer, Tesco Plc, signing a 60m pounds contract to re-equip its supermarkets with Siemens kit. Numerous other sales have been made which keep SNI at the undisputed number one spot in this market. On the services side, SAP R/3 implementation continues to be a boom business while further outsourcing and IT partnering contracts are being won from government organizations spurred on by the Private Finance Initiative. Siemens Nixdorf hopes to bring service revenues up to 50% of its total from the current 30% level.

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