- Siemens increases profit despite weakness in automation
Siemens' profits gush again despite a stumble in its crucial automation business. In the third quarter of its fiscal year, the Munich-based company earned a net profit of around 2.1 billion euros, it announced. That was 48 percent more than in the previous year's quarter, which was burdened by a special effect. Revenue also increased, but at a slower pace of four percent to 18.9 billion euros.
Siemens CEO Roland Busch spoke of "healthy growth" despite challenging economic conditions. "We continue to benefit from sustained high demand for electrification," he noted. "Another growth driver was our particularly strong industrial software business, which won several large licensing contracts. However, the industrial automation business remains challenging."
Weak demand for the model student
These licensing contracts - seven with two- or three-digit million amounts, according to CFO Ralf P. Thomas - saved the segment Digital Industries (DI) from a poor performance. In normal times, it is usually the star performer in the Siemens group. However, the automation business housed there is currently suffering from weak demand and poor capacity utilization. Its revenue fell by a quarter compared to the previous year. This is partly due to the fact that business is also running more slowly at customers, for example in China, where high inventory levels are still being reduced.
This situation is not expected to change quickly: Busch said the outlook for automation is weak for the current and next quarter. It will not improve until the following quarter, i.e., April to June 2025.
No information on short-time work
In response to the weakness in automation, the company is using "all flexibility programs," said CFO Thomas. The goal is to overcome these challenges as best as possible without endangering its own prospects, including for a future upswing. He did not provide specific information on whether short-time work is being used.
However, the current weakness does not seem to harm the head of Digital Industries, Cedrik Neike. On the eve of the publication of the figures, Siemens announced that his contract has been extended until the year 2030. Neike is considered a potential long-term successor to the current CEO Busch.
Prognosis confirmed - partly at the lower end
The other major segment, Smart Infrastructure (SI), performed well across the board, with business running particularly well in the USA. SI had a "super, super run," said Thomas, who was particularly pleased with the improved margin. Business with data centers is booming here. The much smaller rail division Mobility also performed solidly.
Given the current developments, Siemens has confirmed its prognosis for its fiscal year, which ends on September 30. The division between the well-performing segment Smart Infrastructure and the struggling Digital Industries is also evident here: While the margin at DI is expected to be at the lower end of the previously indicated range, it is expected to be at the upper end for SI.
Roland Busch, the CEO of Siemens, acknowledged the challenges facing the automation business, stating that the outlook for automation is weak for the current and next quarter, and it is not expected to improve until the following quarter. Despite the weakness in the automation sector, Siemens has extended the contract of Cedrik Neike, the head of Digital Industries, until 2030, indicating his potential as a long-term successor to Busch.
