Siemens Profits Surge Amid AI Boom and Electrification Demand

German giant Siemens beat profit estimates on the back of AI boom and demand for electrification

German industrial giant Siemens said Thursday its quarterly profits jumped sharply, driven by demand for production software as well as the "boom" in artificial intelligence and customers upgrading power grids. Net profit was 1.98 billion euros ($2.2 billion) from April to June -- up about 50 percent from a year earlier and higher than analyst forecasts -- on revenue of 18.9 billion euros. Siemens, whose sprawling global business runs from making trains and factory equipment to systems that manage data centres, said its software business performed strongly, winning a series of major contracts. The electrification arm of the group also grew by more than 20 percent, said CEO Roland Busch. "We are benefiting from the boom in artificial intelligence, and the accelerated energy transition," he told journalists after the results were released. "On the one hand, many new data centres are being built, and on the other, power grids are being expanded to accommodate more renewable energy." The group's "smart infrastructure" division, which includes the electrification business, reported revenues were up 10 percent overall from a year earlier. But sales fell in its industrial automation business, which covers areas like automating factories. Orders were down 16 percent overall from the same quarter in 2023, although that period saw a bumper crop of train orders. The "mobility" division, which includes the train business, saw orders drop 70 percent. The Munich-based group confirmed its outlook of achieving revenue growth of four to eight percent over its 2024 fiscal year, which runs to the end of September. However, it cautioned the final result would likely be at the lower end of this range, with Busch saying that "the economic situation in China and Europe remains difficult". "Recent macro indicators point to continuing challenging conditions for industrial demand," he added. In key market China, demand remained "muted", Siemens said. The group's shares were down about half a percentage point on the Frankfurt Stock Exchange following the results. Siemens had long been a producer of heavy industrial equipment but has in recent years sought to shift its focus towards digital technology and factory automation.

Siemens Profits Soar On Software Demand, AI 'Boom'

German industrial giant Siemens said Thursday its quarterly profits jumped sharply, driven by demand for production software as well as the "boom" in artificial intelligence and customers upgrading power grids. Net profit was 1.98 billion euros ($2.2 billion) from April to June -- up about 50 percent from a year earlier and higher than analyst forecasts -- on revenue of 18.9 billion euros. Siemens, whose sprawling global business runs from making trains and factory equipment to systems that manage data centers, said its software business performed strongly, winning a series of major contracts. The electrification arm of the group also grew by more than 20 percent, said CEO Roland Busch. "We are benefiting from the boom in artificial intelligence, and the accelerated energy transition," he told journalists after the results were released. "On the one hand, many new data centers are being built, and on the other, power grids are being expanded to accommodate more renewable energy." The group's "smart infrastructure" division, which includes the electrification business, reported revenues were up 10 percent overall from a year earlier. But sales fell in its industrial automation business, which covers areas like automating factories. Orders were down 16 percent overall from the same quarter in 2023, although that period saw a bumper crop of train orders. The "mobility" division, which includes the train business, saw orders drop 70 percent. The Munich-based group confirmed its outlook of achieving revenue growth of four to eight percent over its 2024 fiscal year, which runs to the end of September. However, it cautioned the final result would likely be at the lower end of this range, with Busch saying that "the economic situation in China and Europe remains difficult". "Recent macro indicators point to continuing challenging conditions for industrial demand," he added. In key market China, demand remained "muted", Siemens said. The group's shares were down about half a percentage point on the Frankfurt Stock Exchange following the results. Siemens had long been a producer of heavy industrial equipment but has in recent years sought to shift its focus towards digital technology and factory automation.

Siemens profits soar on software demand, AI 'boom'

Frankfurt (Germany) (AFP) - German industrial giant Siemens said Thursday its quarterly profits jumped sharply, driven by demand for production software as well as the "boom" in artificial intelligence and customers upgrading power grids. Net profit was 1.98 billion euros ($2.2 billion) from April to June -- up about 50 percent from a year earlier and higher than analyst forecasts -- on revenue of 18.9 billion euros. Siemens, whose sprawling global business runs from making trains and factory equipment to systems that manage data centres, said its software business performed strongly, winning a series of major contracts. The electrification arm of the group also grew by more than 20 percent, said CEO Roland Busch. "We are benefiting from the boom in artificial intelligence, and the accelerated energy transition," he told journalists after the results were released. "On the one hand, many new data centres are being built, and on the other, power grids are being expanded to accommodate more renewable energy." The group's "smart infrastructure" division, which includes the electrification business, reported revenues were up 10 percent overall from a year earlier. But sales fell in its industrial automation business, which covers areas like automating factories. Orders were down 16 percent overall from the same quarter in 2023, although that period saw a bumper crop of train orders. The "mobility" division, which includes the train business, saw orders drop 70 percent. The Munich-based group confirmed its outlook of achieving revenue growth of four to eight percent over its 2024 fiscal year, which runs to the end of September. However, it cautioned the final result would likely be at the lower end of this range, with Busch saying that "the economic situation in China and Europe remains difficult". "Recent macro indicators point to continuing challenging conditions for industrial demand," he added. In key market China, demand remained "muted", Siemens said. The group's shares were down about half a percentage point on the Frankfurt Stock Exchange following the results. Siemens had long been a producer of heavy industrial equipment but has in recent years sought to shift its focus towards digital technology and factory automation.

Siemens's Net Profit Rises as AI Boom Lifts Demand -- 2nd Update

Siemens posted higher third-quarter net profit and revenue, and said the artificial-intelligence boom and the energy transition are powering demand. The German industrial giant said Thursday the economic situation in China and Europe remained difficult, but the company kept delivering orders it had on its backlog and expanded profitability. Siemens said the performance of its smart infrastructure segment stood out, continuing to benefit from an AI-driven data-center buildout and demand from energy customers. Industrial companies that have reported so far this earnings season said they experienced strong demand from data centers amid a surge in construction activity. European peers ABB and Schneider Electric said results benefited from that trend. In the U.S., Eaton executives said stronger-than-expected growth in data centers was a key reason behind an increase in the company's sales growth guidance for the year. "We're benefiting from the boom in artificial intelligence, or AI, and the accelerated energy transition," Siemens Chief Executive Roland Busch said in a call. "On the one hand, many new data centers are being built and, on the other, power grids are being expanded to accommodate more renewable energies." Siemens executives expect AI-driven growth to continue, even if not at current steep levels, but acknowledged there has been a certain hype about the technology in the past quarters. "The boom in AI is acting as a supercharger, which requires more and more computing power and corresponding data centers," Busch said. Busch said the demand for electrical power will triple by 2050. For the quarter ended June 30, Siemens's net profit increased to 1.98 billion euros ($2.16 billion) from EUR1.28 billion for the same period of the prior year. Analysts had forecast net profit at EUR1.80 billion, according to consensus estimates provided by Visible Alpha. Revenue rose to EUR18.90 billion from EUR18.15 billion. Orders amounted to EUR19.78 billion, down from EUR23.49 billion. The company attributed the lower order intake to a high basis of comparison from the prior-year quarter, particularly at its mobility business. Analysts expected revenue and order intake at EUR18.91 billion and EUR19.18 billion, respectively, according to consensus estimates provided by the company. Profit from industrial business rose 11% to EUR3.03 billion, with a margin increase to 16.5% from 15.4%. Profit margins expanded across all industrial businesses, Siemens said. Shares traded 0.9% lower at EUR154.70 in European morning trading. At its smart industries segment, Siemens saw significant order growth on contributions from all businesses, most notably the electrification and buildings businesses, it said. The group saw order intake that included a number of larger contracts from data center and energy customers. "Another growth driver was our particularly strong industrial software business, which won several large license contracts. The industrial automation business remains challenging," Busch said. The conglomerate, coming off weak results from its majority-owned healthcare business Siemens Healthineers last week and facing a subdued automation market, delivered a reassuring quarter, Deutsche Bank Research analysts Gael de-Bray and Nabil Najeeb said in a note to clients. For the fiscal year ending in September, the company backed its outlook as given in the prior quarter. It continues to expect comparable revenue growth for the Siemens Group and profit margin for Digital Industries expected at the lower end of the previously-guided range and profit margin for smart infrastructure expected is at the upper end of the range, it said.

Siemens Posts Net Profit Rise on High Electrification Demand -- Update

Siemens posted higher third-quarter net profit and revenue, as it continues to benefit from high demand for electrical infrastructure driven by data centers and energy customers. The German industrial giant said Thursday that for the quarter ended June 30 net profit increased to 1.98 billion euros ($2.16 billion) from EUR1.28 billion for the same period of the prior year. Analysts had forecast net profit at EUR1.80 billion, according to consensus estimates provided by Visible Alpha. Revenue rose to EUR18.90 billion from EUR18.15 billion. Orders amounted to EUR19.78 billion, down from EUR23.49 billion. Analysts saw revenue and order intake at EUR18.91 billion and EUR19.18 billion, respectively, according to consensus estimates provided by the company. Profit from industrial business rose 11% to EUR3.03 billion, with a margin increase to 16.5%. Siemens saw significant order growth on contributions from all businesses, most notably the electrification and buildings businesses, it said. The group saw order intake that included a number of larger contracts from data center and energy customers. Industrial companies that have reported so far this earnings season said they experienced strong demand from data centers amid a surge in construction activity driven by artificial intelligence. European peers ABB and Schneider Electric said results benefited from data-center demand. In the U.S., Eaton said stronger-than-expected growth in data centers was a key reason behind an increase in its sales growth guidance for the year. The rise of AI could drive around 10% to 20% growth a year in the global data-center market over the next decade, potentially ushering in a new era of growth for electricity demand, Jefferies analysts said in a recent note to clients. "Another growth driver was our particularly strong industrial software business, which won several large license contracts. The industrial automation business remains challenging," Chief Executive Roland Busch said. For the fiscal year ending in September, the company backed its outlook as given in the prior quarter. It continues to expect comparable revenue growth for the Siemens Group and profit margin for Digital Industries expected at the lower end of the previously-guided range and profit margin for Smart Infrastructure expected is at the upper end of the range, it said.

Siemens confirms forecast - automation remains under pressure

MUNICH (dpa-AFX) - The technology group Siemens can look forward to continued good business with intelligent infrastructure. The company therefore increased sales and profits in the third quarter. "We continued to benefit from the sustained high demand for electrification," commented CEO Roland Busch on the development. The industrial software business also proved robust. In contrast, factory automation, which has long driven growth in the Group, remains subdued - the recovery will take longer than expected. The reduction of customers' full inventories is dragging on, particularly in China. In addition, the resulting increase in competition is leading to price pressure in the region. The share lost 1.4 percent on Thursday morning. Analysts were quite positive in their initial assessment, pointing to strong results in Smart Infrastructures and Software. However, Bernstein analyst Nicholas Green criticized the weak performance of the train division and the problems in the automation business. In the third quarter (as at the end of June), revenue rose by four percent to 18.9 billion euros, as the company announced in Munich. Comparable growth amounted to five percent. This excludes currency and portfolio effects. The result of the industrial business, which reflects the operational development, increased by eleven percent to 3 billion euros. In addition to Smart Infrastructure, the recovery of the medical technology subsidiary Siemens Healthineers also contributed to this. After taxes, Siemens earned €2.1 billion, almost half more than in the previous year. The figures were better than analysts had expected. The Smart Infrastructure division made the largest contribution to growth with a double-digit percentage increase; the electrification business in particular grew significantly. "We are benefiting from the boom in artificial intelligence and the accelerated energy transition," said Busch, explaining the growth. "On the one hand, many new data centers are being built and, on the other, the power grids are being expanded to accommodate more renewable energy." In Digital Industries, the division with the highest margins, a strong software business was unable to compensate for the sluggish development in industrial automation. Busch referred to the continuing difficult economic situation in Europe and China. "The investment climate is poor in important sectors such as mechanical engineering and the automotive industry." The situation is likely to remain "challenging". "We therefore expect demand to recover more slowly than originally assumed." CFO Ralf Thomas assumes that the reduction of inventories in China will continue "well into the 2025 financial year". In Europe and the USA, the manager continues to assume that inventories will largely normalize by the end of the 2024 financial year (as at the end of September). "In the fourth quarter, lower capacity utilization in the automation business and a less favourable product mix will weigh on margins," he estimates. Nevertheless, the Group has confirmed its forecast for the year. However, the margin in the digital business is likely to be at the lower end of the stated range, it said. Siemens had already lowered its forecast for the division in the second quarter. In Smart Infrastructure, on the other hand, the Group expects a margin at the upper end of the range. For the Group, CEO Busch continues to expect revenue growth on a comparable basis of four to eight percent. The company confirmed that the increase is likely to be at the lower end of the range. Siemens expects earnings per share before certain purchase price effects following acquisitions to be between 10.40 and 11.00 euros. In the previous year, the corresponding profit rose to 9.93 euros. This excludes the investment in Siemens Energy, which is now only recognized as a financial asset and no longer in the income statement. Siemens can continue to look back on a robust order book. In the third quarter, new business fell by 16 percent. This was due in particular to the decline in the Mobility train division, which had benefited from major orders in the same period of the previous year. Smart Infrastructure, on the other hand, recorded double-digit percentage growth. In the Digital division, new software business grew strongly thanks to a series of large orders for licensed software, as Siemens also reported. However, this is unlikely to be repeated. The order intake in automation, on the other hand, fell "moderately", as was reported./nas/niw/mis