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(Bloomberg) — Siemens AG sees group revenue growth and returns in its key industrial unit at the lower end of forecasts because of factories running below capacity and high customer stock levels.
Weak sales and a drop in new orders during the fiscal third quarter for Siemens’ factory automation business outweighed a jump in software demand amid a number of large new contracts for the division, the company said Thursday.
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The German industrial company has set a minimum goal of comparable revenue growth of 4% for the group during fiscal 2024 ending in September. Digital industries’ margin is expected no lower than 18%. The company had lowered its outlook for the unit in May after disappointing demand in China with a global consumer pullback becoming more entrenched since.
Industrial companies are contending with weak business in China, where a deepening real-estate crisis is weighing on spending and dragging down economic growth. Swiss rival ABB Ltd. last month reported a decline in orders for automation products in China and the Americas, saying business in China “continues to be negative overall.”
The market for industrial automation “remains challenging,” Siemens Chief Executive Officer Roland Busch said in a statement. Like ABB last month, Siemens said demand for electrification, such as from data centers, remained high.
During the third quarter, profit from its industrial business rose 11% to €3.03 billion ($3.3 billion), beating analyst estimates of a €2.83 billion result. Overall orders fell 16% to €19.8 billion.
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China’s economy might broadly recover in 2025, Siemens said previously, where it supplies devices and software for factory automation and smart buildings.
CEO Busch has been exiting heavy equipment businesses and shifting to higher-margin, software-driven product lines to catch up to the profitability of automation peers like Rockwell Automation Inc. or Schneider Electric SE.
In May, it announced the sale of its Innomotics unit, which makes heavy-duty electric motors, to KPS Capital Partners LP for €3.5 billion. Siemens has now offloaded most of the smaller divisions destined for divestment, alongside spin-offs of businesses like gas turbine maker Siemens Energy AG and health-care equipment maker Siemens Healthineers AG.
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