Siemens Debt Ratings Upgraded

Standard & Poor's Ratings Services said today that it had removed its 'AA-' long-term and 'A-1+' short-term corporate credit ratings on Germany-based industrial conglomerate Siemens from CreditWatch, reflecting reduced uncertainty about the company's strategic direction following the appointment of Peter Löscher as CEO.

The ratings were placed CreditWatch with negative implications on April 26, 2007, following the resignation of former CEO Klaus Kleinfeld. Standard & Poor's also affirmed the ratings. The outlook is negative. "The rating action reflects reduced uncertainty over strategic and business execution following Mr. Löscher's appointment," said Standard & Poor's credit analyst Andreas Zsiga.

S&P says that there appears to be a strong commitment throughout Siemens to further performance improvement as demonstrated by a recently announced program known as Fit4 2010, which focuses on organic growth, improved profitability, and cash flow generation, and is credit supportive. An IPO by the company's VDO Automotive unit is progressing as planned.

However, the final magnitude of an ongoing embezzlement investigation and its impact on the ratings remains uncertain. Given the nature of the investigation, and the broadening of the scope of internal and external enquiries, further negative financial and operational issues cannot be ruled out.

The negative outlook reflects the fact that Siemens currently has very little leeway to engage in further debt-financed acquisition activity beyond small bolt-on purchases."

Posted to the site on 18th June 2007