Siemens booms on pent-up demand

Zurich — German engineering and technology group Siemens unveiled on Thursday a huge jump in orders during its first quarter and indicated it would continue trimming fringe businesses, driving its shares up more than 6%.

Orders surged 52%, the maker of trains and factory software said, as customers rushed to make sure they got enough equipment and as demand increased after the pandemic slowdown. Siemens, one of the world’s largest capital goods companies, also beat forecasts for revenue and profit for the three months to December 31.

“We’ve seen an unprecedented boom,” CEO Roland Busch told reporters.

The company now has an order backlog of €93bn, its highest yet, though this would lead to some delays, Busch said.

“It will take several quarters for this backlog to be processed,” Busch said. “We’re currently unable to meet our high standards for delivery times for all our products.”

Industry has been hampered in its post-pandemic upturn by a shortage of components, particularly semiconductor chips, as well as congested logistic chains. These factors have delayed production of cars, computers and other products. This  led to extensive pre-ordering by customers desperate to get their hands on electrical and automation products.

Siemens said big contracts had been signed during the quarter for new trains and there was high demand for software used to make integrated circuits and printed circuit boards. Its industrial profit rose 12% to €2.46bn during the quarter, beating analyst forecasts for €2.27bn.

Net profit rose 20% to €1.8bn on revenue up 17% to €16.5bn, also beating forecasts, while it confirmed its full-year guidance. Its shares rose as much as 6.4% before trimming gains to 5% by midafternoon.

Siemens will continue trimming its portfolio of companies as it seeks to become a more focused technology company.

Late on Wednesday Siemens said it was selling the mail and parcels part of its logistics business and its 50% stake in the Valeo Siemens e-Automotive joint venture. 

“The divestment of the parcel logistics and the exit from Valeo Siemens are major steps on focusing our portfolio and at the same time, creating substantial value and reducing volatility,” CFO Ralf Thomas told analysts.

The two deals will raise Siemens’ net income by €1.1bn to €1.3bn this year, it said, with the company targeting €1.5bn  from selling off businesses for the year overall.

“We assume that rigorous execution of our portfolio optimisation strategy will contribute similarly as in fiscal 2021, when we generated €1.5bn in net income,” the company said, referring to its sale of mechanical drives business Flender and stakes in other companies.

Reuters