Digital division is weakening
Siemens exceeds expectations and increases profits
February 8, 2024, 8:52 a.m
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At the start of its new financial year, Siemens is growing somewhat weaker than expected, but the result in its core business is stronger than analysts estimated. The profit is even rising sharply, but this can also be partly attributed to the company’s own pension fund.
The Munich technology group Siemens sees itself on track after the first quarter of the 2023/24 financial year. In the first quarter (October to December), sales increased on a comparable basis by six percent to 18.4 billion euros, Siemens announced before the general meeting in Munich. Contrary to analysts’ expectations, incoming orders increased by two percent to 22.3 billion euros on a comparable basis. At 2.55 (same period last year: 1.64) billion euros, the net profit was well above the experts’ forecasts. “Siemens once again delivered a strong quarter and continued its profitable growth,” summarized CEO Roland Busch.
Siemens also owed the jump in profits to special income of 479 million euros as a result of the transfer of a package of Siemens Energy shares to its own pension fund. After Siemens reduced its share in the former energy technology subsidiary from 25 to 17 percent shortly before the turn of the year, its losses and profits will no longer be recorded proportionately in the profit and loss statement.
The upheavals there, especially in the wind power business, had repeatedly distorted Siemens’ figures. The operating result from the group’s industrial business rose by three percent to 2.72 billion euros in the first quarter; analysts had expected stagnation.
For the year as a whole, the previous expectations remain: comparable sales growth of four to eight percent and a profit of 10.40 to 11.00 euros per share (previous year comparable: 9.93) – adjusted for Siemens Energy effects .
However, Siemens’ flagship division, the Digital Industries automation division, is showing weaknesses: orders there fell by a third in the first quarter and earnings fell by 20 percent. Customers had reduced inventories after they had previously brought forward orders, explained Siemens. On the other hand, the Smart Infrastructure building and infrastructure division is stronger than ever in a first quarter. Their result was almost as high as that of Digital Industries. In the Mobility train division, order intake has almost doubled thanks to a number of large orders. In total, Siemens has orders worth 113 billion euros on its books, more than ever.