Siemens earned significantly more in the past quarter than it did a year ago – but one of the group’s core businesses continues to suffer from weak demand.
Siemens’ profits are booming again. In the third quarter of its fiscal year, the Munich-based company reported a net profit of 2.1 billion euros. That was 48 percent more than in the same period last year, which was impacted by a special effect. Sales also increased – by 4 percent to 18.9 billion euros. However, the important industrial automation business continues to suffer from weak demand.
“We continued to benefit from the sustained high demand for electrification,” emphasized Siemens CEO Roland Busch. “Another growth driver was our particularly strong industrial software business, which was able to win several major licensing agreements. However, the industrial automation business remains challenging.”
Weak demand for model students
These license agreements saved the balance sheet of the Digital Industries (DI) segment. In normal times, it is usually the model student in the Siemens Group, but the automation business located there is currently suffering from weak demand and poor utilization of its capacities. One of the things that is noticeable here is that business is also slower for customers and that some inventories are still being reduced. At least orders from the important Chinese market have increased.
However, this current weakness does not seem to be affecting the head of Digital Industries, Cedrik Neike. On the eve of the figures’ publication, Siemens announced that his contract had been extended until 2030. Neike is considered a potential long-term successor to the current CEO Busch.
The other major segment, Smart Infrastructure (SI), grew across the board, with business going particularly well in the USA. The much smaller rail division, Mobility, also performed solidly.
Forecast confirmed – partly at the lower end
In view of the current developments, Siemens has confirmed its forecast for its fiscal year, which runs until the end of September. However, the division of the business between the well-performing Smart Infrastructure segment and the ailing Digital Industries segment is also evident here: While the margin for DI is expected to be at the lower end of the previously stated range, it is expected to be at the upper end for SI.
Source: Stern
