German electronics and engineering giant Siemens expects to improve on last year's results, forecasting a 5% to 12.5% increase in worldwide demand for mobile phones.

In a statement, Siemens also said its ICM mobile phone unit would stay independent but warned there could be further restructuring, which often indicates more job losses.

"We don't want to give up our independence in mobile phones," Chairman Heinrich von Pierer said.

For the financial year ending October, Siemens reported net profit had slumped by 75% to 2.08bn euros ($1.76bn) after a record 8.86bn euros in the previous year.

The company cut 17,000 jobs last financial year.

Mobile outlook

The good news for the company's mobile phone unit is that industry-wide sales forecasts of 400 million handsets in 2001 should be met.

Siemens said it expects sales to increase to between 420 and 450 million in 2002.

Siemen's Information and Communication Mobile (ICM) division, which makes both mobile handsets and mobile infrastructure, reported its first ever fall in sales last financial year.

The company said it is in talks with several mobile phone makers, particularly over cooperation for third generation (3G) handsets, to cut costs and development times.

Siemens has put its cooperation with Japanese partner Toshiba to develop 3G, announced in May, on hold temporarily due to technical problems.

Shares improve

Shares in Siemens rose 4% in early trade after soaring by up to 10% yesterday.

On Wednesday, it cut its stake in Infineon Technologies to below 50%, removing the loss-making chip unit from its profit and loss account.

Infineon reported a net loss of 591m euros ($527.7m) in the year to September, which had threatened to drag Siemens results down for the next two quarters.