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Last Updated: Monday, 17 March 2008, 23:35 GMT
Shock profit warning from Siemens
Siemens headquarters

Shares in Siemens have fallen by 17% after the German industrial giant unexpectedly issued a profit warning.

After a review of projects, it warned that its three-month earnings would be cut by 900m euros ($1.4bn; 692m), shaking investors' faith in the firm.

Project delays were blamed, especially at its power station unit, which were due to problems with suppliers and difficulties with recruiting engineers.

It also said the British government had cancelled an 85m euro IT project.

The project at Siemens IT Solutions and Services was cancelled because the company said it would not be able to meet its timetable.

Its shares ended the day down 17% at 66.06 euros, its biggest one-day fall since 1991.

Restructuring plans

The warning covers the current quarter, which runs to the end of March.

It came as a shock to the markets because in January Siemens issued an upbeat statement, predicting that its sales would grow at double the rate of the global economy.

It is in the middle of a restructuring programme, under its chief executive Peter Loescher, who took over last year when the company was struggling with allegations of corruption.

His changes so far have included reorganising the company's 10 units into three divisions.

Last month he announced changes in its corporate telecoms unit that involved either cutting or transferring 6,800 jobs.

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