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Werner von Siemens, who founded the eponymous conglomerate two centuries ago, may not have had to worry about Murphy's Law. Peter Loscher, current boss of the German behemoth, does. Siemens is large and complex, and makes products which are intricate. Sadly, it has become a safe bet something will go awry.

Thursday's second-quarter results were a case in point. Sales for January to March were down by 6 per cent year on year at €18-billion ($23.6-billion). Operating profit from the four main divisions, fell by almost a third to €1.4-billion. Part of the blame rested with the weak global economy. But the latter figure was also dented by €250-million of project charges – high-speed trains and wind farms were the culprits – and €100-million of restructuring charges. It was only thanks to a much improved contribution from investments (including joint venture NokiaSiemens) that profits from continuing businesses overall were flat.

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The ensuing air of disappointment overshadowed some pluses. Chunky business wins, for example, lifted orders by a fifth year over year and pushed the book-to-bill ratio to 1.19. But short-cycle businesses – like industrial automation – are not now expected to bottom until summer. So Siemens eased its full-year earnings guidance to €4.5-billion (the lower end of its range), and warned that portfolio changes and charges (outside the guidance) would lop off €500-million.

To stand any chance of powering ahead, Siemens needs to get ahead of events. Its best hope is the big cost-driven overhaul, which aims to increase margins from core operating divisions to 12 per cent-plus by 2014. This seems on track, but is heavily back-loaded: only €900-million of €6-billion-plus in productivity improvements have been secured so far. If this succeeds, the shares, which have only slightly bettered the Stoxx 600 over the past five years, should finally re-rate. There is everything to play for – but also everything to still go wrong.

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