Siemens Quarterly Profit Surpasses Market Expectations on Electrification and Software Demand

August 09, 2024 02:44 AM AEST | By Team Kalkine Media

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Siemens reported an 11% rise in operating profit for the April-to-June quarter, exceeding market predictions.

The company's performance was driven by upgrades in electricity infrastructure and increased demand for production software.

Despite a challenging environment for its industrial automation business, Siemens confirmed its fiscal year guidance and aims to accelerate its shift towards a technology-focused enterprise.

German industrial gear maker Siemens posted better-than-expected earnings growth during the April-to-June quarter, buoyed by customers upgrading their electricity infrastructure and the high demand for production software.

For its fiscal third quarter, Siemens(ETR:SIE) reported an 11% increase in operating profit before certain items to 3.0 billion euros ($3.3 billion), surpassing the average analyst forecast of 2.84 billion euros as shown on the group's website. The maker of trains and factory automation systems confirmed its guidance for its fiscal year ending in September. This positive outcome was attributed to exceptionally high orders for industrial software, although it was balanced by a challenging environment for its industrial automation business.

Siemens stated that revenue growth is still expected to be at the lower end of a range between 4% to 8%, after adjustments for currency fluctuations, acquisitions, and divestments.

Profit margins at the Digital Industries unit, which produces software and equipment for process automation, are anticipated to be at the lower end of the previously targeted range. In contrast, margins at the Smart Infrastructure unit, responsible for systems for ventilation, wiring, and security at large facilities, are projected to be at the upper end of the target range. Orders in the quarter fell by 15%, but were better than expected at 19.8 billion euros, following a year-earlier period that was boosted by a record number of train orders. This performance highlights the impact of technology stocks on overall financial results.

Siemens announced late on Wednesday that it plans to accelerate its transition to a technology-focused enterprise by expanding its management board from five to seven members.

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