Siemens misses profit forecast as customers stick to destocking
Manufacturer reports drop in second-quarter earnings
16 May 2024 - 15:43
byJohn Revill
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Zurich — Siemens reported on Thursday a drop in second-quarter earnings at its industrial business, as China maintained its trend of destocking longer than previously expected.
The maker of items from trains to industrial software said its business was still being hit by uncertain customers preferring to run down supplies rather than buy new equipment.
Though Siemens expected an improvement in coming months, it was likely to come more slowly than previously thought, CEO Roland Busch said.
“A key reason is the muted development in China,” he said. “Overcapacities in certain customer industries, such as solar and electric vehicles, are another reason.”
He added: “In addition, Europe’s key export-driven markets, such as Germany, are recovering only very sluggishly.”
Siemens expects the destocking trend in China to run through the rest of 2024, though it expected stock levels in Europe and the US to return to normal by the end of September.
As a result Siemens cut its full-year outlook for digital industries, traditionally its most profitable business, saying it now expected a sales decline of 4%-8%.
The fortunes of Siemens are seen as an indicator for the health of the broader global economy, with its products used in transport systems as well as to control factory machinery.
For its second quarter from January to March, Siemens reported a drop of 2% in industrial profit to €2.51bn. That missed average analyst forecasts for €2.68bn in a company-gathered consensus.
Sales fell 1% to €19.16bn, below an expected €19.28bn, while net profit fell to €2.19bn.
The company’s stock was down 1.1% in early trade on the Frankfurt market.
In contrast to the struggles at its digital industries division, Siemens’ buildings and transport divisions both posted increases in revenues, proving the resilience of the company, Busch said.
Siemens confirmed its outlook for annual sales at group level to increase by 4% to 8%, though CFO Ralf Thomas said the figure was likely to be at the lower end of the range.
It also said it would sell its Innomotics large motors and drives business for €3.5bn to KPS Capital Partners.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Siemens misses profit forecast as customers stick to destocking
Manufacturer reports drop in second-quarter earnings
Zurich — Siemens reported on Thursday a drop in second-quarter earnings at its industrial business, as China maintained its trend of destocking longer than previously expected.
The maker of items from trains to industrial software said its business was still being hit by uncertain customers preferring to run down supplies rather than buy new equipment.
Though Siemens expected an improvement in coming months, it was likely to come more slowly than previously thought, CEO Roland Busch said.
“A key reason is the muted development in China,” he said. “Overcapacities in certain customer industries, such as solar and electric vehicles, are another reason.”
He added: “In addition, Europe’s key export-driven markets, such as Germany, are recovering only very sluggishly.”
Siemens expects the destocking trend in China to run through the rest of 2024, though it expected stock levels in Europe and the US to return to normal by the end of September.
As a result Siemens cut its full-year outlook for digital industries, traditionally its most profitable business, saying it now expected a sales decline of 4%-8%.
The fortunes of Siemens are seen as an indicator for the health of the broader global economy, with its products used in transport systems as well as to control factory machinery.
For its second quarter from January to March, Siemens reported a drop of 2% in industrial profit to €2.51bn. That missed average analyst forecasts for €2.68bn in a company-gathered consensus.
Sales fell 1% to €19.16bn, below an expected €19.28bn, while net profit fell to €2.19bn.
The company’s stock was down 1.1% in early trade on the Frankfurt market.
In contrast to the struggles at its digital industries division, Siemens’ buildings and transport divisions both posted increases in revenues, proving the resilience of the company, Busch said.
Siemens confirmed its outlook for annual sales at group level to increase by 4% to 8%, though CFO Ralf Thomas said the figure was likely to be at the lower end of the range.
It also said it would sell its Innomotics large motors and drives business for €3.5bn to KPS Capital Partners.
Reuters
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