Siemens AG misses expectations but reassures with strong order intake
The German industrial conglomerate has posted mixed quarterly results. While revenue and industrial profit fell short of expectations, a sharp rise in orders confirmed the strength of the backlog. The stock was trading slightly higher this morning.
Siemens AG reported Q2 results that missed expectations on Wednesday, amid a geopolitical environment described by the German group as "very demanding".
Revenue was flat at €19.76bn, below the company-provided consensus of €20.14bn. Industrial profit declined by 8%, also slightly below forecasts.
This decline is partly attributed to an unfavorable comparison basis. Last year, Siemens benefited from a €300m gain related to the disposal of its wiring activities. Net income, however, reached €2.24bn, exceeding projections.
Orders driven by data centers
The primary silver lining came from orders, which rose by 11% over the quarter. This growth beat expectations, fueled notably by robust demand in smart infrastructure. Orders related to data centers particularly bolstered the Smart Infrastructure division.
The Digital Industries division showed more mixed momentum, with orders slightly ahead of expectations but growth deemed more moderate in China. Conversely, Siemens noted an improvement in electronics and semiconductors, alongside strong demand from data centers. This allows the group to confirm its annual targets, with revenue growth still expected between 6% and 8% and a book-to-bill ratio above 1.
In parallel, Siemens announced a new share buyback program of up to €6bn over a maximum period of 5 years. Analysts viewed the announcement positively, although some believe the stock already prices in much of the good news.
At the Frankfurt Stock Exchange opening, the shares slipped 1% before subsequently moving back into positive territory.
Siemens AG is one of the world's leading manufacturers of electronic and electro-technical equipments. Net sales break down by family of products as follows:
- medical equipment (29.6%): medical imaging systems, laboratory diagnostics and hearing aid systems, etc.;
- smart building and infrastructure solutions (28.7%): energy transition solutions, HVAC products (heating, ventilation and air conditioning systems), building security systems (fire detection and protection systems, access control, video surveillance and intrusion detection systems, etc.), building management systems, etc.;
- digital industrial equipment (22.1%): automated production, assembly, logistics and monitoring systems, etc.;
- mobility solutions and systems (15.8%): rail vehicles, rail automation systems, rail electrification systems, digital and cloud-based solutions, etc.
The remaining net sales (3.8%) are primarily from financial activities (leasing, equipment and project financing, financial consulting services, etc.).
Net sales are distributed geographically as follows: Germany (14.8%), Europe/Commonwealth of Independent States/Africa/Middle East (32%), the United States (28%), America (4.6%), China (9.1%), Asia and Australia (11.5%).
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