Siemens Q3 misses forecasts due to weakening demand.

Siemens Q3 misses forecasts due to weakening demand.

Siemens Misses Profit Forecasts as Demand Weakens in China and Global Markets


ZURICH – Siemens, the German engineering company, reported on Thursday that it missed profit forecasts in its latest quarter due to weakening demand in several markets, including China. This news marks a setback for the trains-to-factory-automation manufacturer, highlighting the challenges in the global manufacturing sector.

Siemens indicated that China, traditionally a significant driver of global manufacturing and the company’s third-largest market, has experienced only a tepid recovery following its zero-COVID shutdown last year. The company noted that customers in China and around the world have been depleting their stocks of components, a trend expected to continue in the coming quarters.

“Recovery in China’s manufacturing sector has been slower than anticipated,” stated Siemens CEO Roland Busch. “As a result, we expect the trend to stay flat.” This insight provides valuable information regarding the health of the global economy, as Siemens’ products are widely used to automate factories and equip transport networks.

During the three months ending in June, Siemens’ industrial profit, which includes its mobility, smart infrastructure, and factory automation businesses, fell 4% to 2.75 billion euros ($3.02 billion). This figure missed analysts’ expectations of 2.90 billion euros, as indicated by a company-compiled consensus. Consequently, Siemens’ shares fell 3.6% in premarket activity.

Siemens kept its group-level outlook for the year ending in September but adjusted its expectations for its digital industries business, which supplies factories with controllers. The company now expects comparable revenue growth of 13% to 15% in this division, lower than the previously forecasted 17% to 20%. The decline in order intake, particularly in the short-cycle factory automation business, contributed to this adjustment.

Nevertheless, the digital industries division managed to increase revenue and profit during the quarter by leveraging its extensive order book and benefiting from higher capacity utilization at its own factories, as well as the sale of more profitable products. This demonstrates the resilience and adaptability of Siemens even during challenging market conditions.

Siemens’ third-quarter orders rose 10% to 24.24 billion euros, surpassing forecasts of 22.19 billion euros. However, revenue only increased by 6% to 18.89 billion euros, falling short of the predicted 19.27 billion euros. Additionally, the net profit of 1.44 billion euros missed analysts’ expectations.

Despite these mixed results, Siemens maintained its guidance at the group level. The company expects comparable revenue growth of 9% to 11% for the 12 months ending in September, with projected earnings per share of 9.60 to 9.90 euros.

In conclusion, Siemens’ recent profit miss due to weakened demand in China and global markets highlights the challenges faced by the manufacturing sector. The slower-than-anticipated recovery in China’s manufacturing, a critical driver for the global economy, indicates a need for caution amidst uncertainties. Nevertheless, Siemens remains optimistic about its overall performance, emphasizing the importance of adaptability and resilience in navigating fluctuating market dynamics.