Siemens, profits above expectations with software, weak automation
Profits at EUR 3 billion, orders down - Year-end revenue growth at the lower end of guidance expected
2' min read
2' min read
Siemens' earnings beat analysts' expectations, thanks to demand for upgrades to its electrical infrastructure and production software, despite a drop in orders.
In the fiscal third quarter, the German group reported an 11% increase in operating profit to EUR 3 billion against a consensus of EUR 2.84 billion.
The manufacturer of trains and industrial automation systems (Siemens has long been a manufacturer of heavy industrial equipment, but in recent years has sought to shift its focus to digital technology and factory automation) confirmed its forecast for the fiscal year to the end of September, saying that exceptionally high orders for industrial software were tempered by a difficult environment for its industrial automation business. Revenue growth is still seen at the lower end of a 4% to 8% range. Margins for the Digital Industries division are expected to be at the lower end of the guidance range, while they should reach the upper end of the range for the Smart Infrastructure division.
Orders in the quarter fell by 15%, but were better than expected at EUR 19.8 billion (the comparison with the previous year's figure is affected by a record order). Siemens AG sees group revenue growth and returns in its key industrial unit below expectations due to factories operating below capacity and high customer inventory levels. The digital industries margin is expected to be no less than 18%. The company had revised down its outlook for the unit in May after disappointing demand in China, with global consumer declines becoming more entrenched since then.
'We grew profitably in the third quarter, continuing to benefit from the high demand for electrification,' said Chief Executive Officer Roland Busch. 'Another growth driver was our particularly strong industrial software business, which won several major licensing contracts. The industrial automation business remains challenging. We confirm the full-year outlook for our company. We still have a weak market for automation,' he added in an interview with Bloomberg Television, adding that he expects the key Chinese market to improve next year, but 'slowly'.
