Weak demand in the automation business is slowing Siemens in the second quarter. The group was successful in selling its subsidiary Innomotics.
After the record year of 2023, business at Siemens is currently slower. While sales stagnated at a good 19 billion euros in the second quarter, profits fell significantly, as the group announced. However, the decline of 38 percent to 2.2 billion is primarily due to the fact that Siemens had recorded a billion-dollar profit in the same quarter of the previous year due to the increasing value of its stake in Siemens Energy.
The Digital Industries (DI) division, which had done particularly well in recent years but is now recording significant declines in sales and earnings, is currently slowing down. However, the picture is two-part: While the software business continues to develop well, automation is dragging the division down. There is “currently subdued demand here,” said Siemens boss Roland Busch.
Different divisions – different success
Especially in China, customers still have high inventories of products. This is also a consequence of the fact that some companies have built up high safety stocks in recent years due to unstable supply chains. What provided additional business back then is now lacking in orders. In addition, especially in China, there is “strong local competition in the lower and middle market segments,” as CFO Ralf Thomas said.
The other two divisions of the core business, Smart Infrastructure (SI) and Mobility, developed better. SI in particular increased sales and earnings – and outperformed DI in both respects.
Overall, Busch spoke of a “solid performance”. Siemens is “resilient in a time that continues to be characterized by a cautious economic situation.”
Siemens confirmed its forecast for the current financial year at group level. In the case of Digital Industries, however, the company expects the weak demand to last a little longer and has lowered its expectations for this area.
Innomotics sale is an “important step”
Siemens, on the other hand, has made significant progress in the long-planned sale of its subsidiary Innomotics: The group will sell the electric motors and large drives business with around 15,000 employees to the US investment company KPS Capital Partners for 3.5 billion euros, as it has now confirmed.
There were already reports on the broad outlines of the deal on Wednesday. The transaction is expected to be completed in the first half of the next financial year. Siemens CFO Thomas spoke of an “important step in optimizing our portfolio.”
The sale will also lead to a decent book profit of probably 2 billion euros, although this will not be due until the next financial year. This is offset by costs totaling around half a billion in the current and the past two financial years.
KPS emphasized that Innomotics is “well positioned”. They want to accelerate the growth path.
The stock market was rather skeptical about the Siemens figures. Siemens shares started the day in the red. However, the paper had reached a record high just a few days ago.
Source: Stern
