(Adds details, Alstom talks, background)
By James Mackenzie
BOURNEMOUTH, England, April 24 (Reuters) - Siemens said on Thursday many of its businesses were on track for 2003 targets but cautioned about slow spending in major markets after posting a fall in second quarter profit and sales.
The German industrial giant posted second quarter net profit of 568 million euros ($622.1 million), down from 1.28 billion a year earlier, when the group booked a gain of 604 million euros from selling shares in Infineon Technologies AG .
The quarterly profit figure beat market expectations -- a Reuters poll of 23 analysts forecast average second quarter net profit of 420 million euros.
Group sales fell 14 percent to 18.23 billion euros, hit by currency translation effects and weaker power generation sales.
"The investment climate in key industries in important regional markets continues to be weak. We cannot see signs of a comprehensive improvement at the moment," Chief Executive Heinrich von Pierer said in a speech to be delivered at a news conference.
"We therefore expect, as we announced in December 2002, that business volumes will decline for the full fiscal year."
Von Pierer also confirmed that the group had reached an advanced stage in talks to buy Alstom's industrial turbines unit, as reported by Reuters earlier this month.
Siemens said in January it expected operating margins at each of its 14 business segments to move towards the targets laid down for the end of this year and next.
Medical Solutions, which has seen a strong run in recent years, reported operating profit of 255 million euros against 262 million a year earlier, with sales down two percent.
But Siemens, which has relied heavily on its Medical and Power Generation units to balance sliding sales of telecoms equipment over the past three years, saw a 35 percent drop in power orders as previously booming U.S. demand has fallen away.
Operating profit at the power unit was 262 million euros, compared with a forecast from analysts polled by Reuters of 246 million euros.
The troubled ICN fixed net unit was slightly weaker than expected, with the operating loss narrowing to 147 million euros from a loss of 158 million a year earlier and compared with a forecast of a 133 million loss.
Siemens, the world's fourth-biggest mobile handset maker, also said it sold eight million handsets in the quarter as the ICM mobiles division improved profit to 55 million euros from 44 million a year earlier.
Continuing weakness in the dollar, which has been declining steadily against the euro over the past year also hit Siemens, which generates more sales in the United States than in any other country in the world.