By Siemens, the German industrial company, has exceeded analysts’ expectations with an increase in net profit for the first quarter of fiscal 2024. The company reported a net profit of 2.39 billion euros ($2.57 billion) for the quarter ended in December, compared to 1.48 billion euros the previous year. Revenue also saw growth, increasing by 1.9% to reach 18.41 billion euros.
Although orders for the period contracted slightly by 1.4%, totaling 22.30 billion euros, Siemens still maintains a substantial backlog of orders worth 113 billion euros.
Analysts had predicted a net profit of 1.69 billion euros and revenue of 18.58 billion euros, according to consensus data provided by the company.
The strong performance can be attributed to the earnings growth witnessed across most of Siemens’ industrial businesses, particularly its smart infrastructure division, which achieved its highest-ever quarterly profit. The smart infrastructure sector recorded a significant 26% increase in profits, amounting to 885 million euros. This growth was primarily driven by the increased demand for data centers and power distribution. Additionally, the company mentioned that this result includes a gain of 94 million euros resulting from the partial reversal of a liability associated with past portfolio activities.
Siemens’s Digital Industries Business Sees Decline in Profit, but Expects Improvements Ahead
Profit at Siemens’s digital industries business has experienced a 20% decrease in the quarter due to normalized demand for short-cycle automation and ongoing destocking by customers, according to Chief Executive Roland Busch. However, Busch noted that there has been a sequential improvement in demand and expects this trend to continue in the coming quarters.
While the overall outlook is positive, Chief Financial Officer Ralf P. Thomas mentioned that customer destocking in China may extend into the second half of fiscal 2024. On the other hand, in regions like Europe and the U.S., Thomas anticipates that customer stock levels will mostly return to normal by mid fiscal 2024. Despite this, Siemens expects limited growth in customer production output in the next quarters, particularly in export-driven industries such as machine building.
Siemens predicts that despite some challenges, digital industries orders will gradually improve in the second quarter, although they will still be lower compared to the previous year. Additionally, the company anticipates that revenue for the second quarter of this year will also be lower compared to the same period in the previous year.
In line with its plans announced in November, Siemens confirmed the initiation of a new share buyback program that could reach up to EUR6 billion over a span of five years.
Siemens remains optimistic about its outlook for fiscal 2024.
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