Siemens falls short of profit expectations due to challenges in industrial sector

The German engineering group, Siemens, reported a drop in second-quarter earnings at its industrial business on Thursday. The slowdown was primarily attributed to the flagship factory automation division of the company’s Digital Industries. Despite strong revenue performance in other businesses like Smart Infrastructure, Mobility, and industrial software, Digital Industries struggled with lower orders, sales and profit during the period.

Siemens’s buildings and transport division both posted increases in revenues. According to Chief Executive Roland Busch, “Siemens proved its resilience with strong revenue performance in Smart Infrastructure, Mobility and industrial software; this nearly offset currently muted demand in Digital Industries’ automation business.” The market environment was challenging for Siemens, which warned in March that revenues at digital industries would be lower.

Digital Industries’ orders fell 14% during the quarter while sales were 13% down as customers preferred to run through their existing stocks of industrial controllers rather than buying new ones. China was flagged as being particularly weak with lower orders and revenues while Europe also struggled. Profit at the division fell sharply as Siemens sold fewer of its higher-margin products and utilized its factories less. Siemens said it now expected the destocking trend to continue into the second half of 2024 and reduced its sales outlook for digital industries. However, the company confirmed its outlook for annual sales at group level to increase by 4% – 8%, helped by slightly stronger growth at its Smart Infrastructure business.

By Sophia Gonzalez

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