The Munich technology group presented strong quarterly figures before the general meeting and confirmed its annual forecast. However, there are skid marks in one core area.
The technology group Siemens started the new financial year with more sales and profits. Industrial automation performed worse than in the same quarter last year because customers reduced inventories in view of the sluggish economy. But strong business in software, building technology and trains more than compensated for this. The bottom line was that quarterly profits increased by 56 percent to 2.5 billion euros, as Siemens announced.
Half a billion euros from the sale of Siemens Energy shares to its own pension fund also contributed to this. This means that Siemens only holds 17.1 percent of the ailing energy technology company. Group sales rose by two percent to 18.4 billion euros in the first quarter of Siemens’ 2023/24 financial year. Order intake also increased by two percent to 22.3 billion euros. A quarter of this was accounted for by the relatively small train division, which received two major orders from Austria.
Siemens’ order backlog is at an all-time high of 113 billion euros, said CEO Roland Busch and confirmed the annual forecast: sales and profits from the previous record year are expected to be exceeded. The shareholders who were invited to the virtual general meeting in Munich this morning can expect an increase in the dividend by 45 cents to 4.70 euros per share.
Industrial automation sector is weakening
Signs of slowdown appeared in industrial automation. The software business was stronger, but sales in the Digital Industries division fell, incoming orders fell by almost a third to 4.0 billion euros, and earnings fell by 20 percent to 0.9 billion euros. CFO Ralf Thomas explained that the sluggish economic environment was putting a strain on incoming orders for automation. Mechanical engineering customers in particular invested less. Stocks would be reduced. In China, this could drag on until the second half of the year.
New highs in smart building technology
Things went better in the second core business, the area of smart building technology. Rising demand for data centers and in the energy distribution sector, for example, helped to offset the economic headwind in short-cycle businesses. Sales rose by 9 percent to 4.8 billion euros, and incoming orders increased slightly to 5.8 billion euros. With an increase in earnings of 26 percent to 0.9 billion euros and a profit margin of 18.3 percent of sales, this area reached new highs.
Successful train division
Even in the relatively small train division, things went very well in the first quarter. The processing of the order backlog for trains and the railway infrastructure and a strong service business caused sales to rise by 12 percent to 2.7 billion euros. The result increased by 29 percent to 251 million euros, and the margin climbed to 9.3 percent – which is strong compared to the competition.
CEO Busch was reluctant to respond to some investors’ wishes that Siemens should focus more strongly and sell the train division or medical technology. There are synergies and it is beneficial to scale technology broadly, he said. “All our businesses play in the Champions League.”