Siemens earned significantly more in the past quarter than it did a year ago. However, one of the group’s prime areas continues to suffer from weak demand.
Siemens’ profits are once again booming despite a slump in the important automation business. In the third quarter of its fiscal year, the Munich-based company reported a net profit of just over 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 – but at a much slower rate of four percent to 18.9 billion euros.
Siemens CEO Roland Busch spoke of “healthy growth” despite the difficult economic situation. “We continued to benefit from the sustained high demand for electrification,” he emphasized. “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 – according to CFO Ralf P. Thomas, there were seven with double- or triple-digit million amounts – 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, which is also located there, is currently suffering from weak demand and poor utilization of its capacities. Its sales fell by a quarter compared to the previous year. One of the things that is noticeable here is that business is also slower for customers and that, for example, high inventories are still being reduced in China.
That will not change quickly: the outlook for automation is also weak in the current and next quarter, said Busch. We will have to wait and see what happens in the quarter after that – April to June 2025 – after which things will start to pick up again.
No information on short-time work
In response to the weakness in automation, the company is using “all flexibility programs,” said CFO Thomas. The company wants to get through these challenges as best as possible without jeopardizing its own prospects – including for a future upturn. He did not comment specifically on whether short-time work would also be used.
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.
Forecast confirmed – partly at the lower end
The other large segment, Smart Infrastructure (SI), grew across the board, with business going particularly well in the USA. SI is having a “super, super run,” emphasized Thomas, who was particularly pleased with the further improvement in margins. Among other things, the data center business is booming here. The much smaller rail division, Mobility, also performed solidly.
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
