Siemens Q3 2023 Profits: Tracking Evidence of Softened Demand Patterns

**Siemens Misses Profit Forecasts as Demand Weakens in China**

German engineering company Siemens reported that it missed profit forecasts in its latest quarter due to weakening demand in several markets, including China. The company stated that China, which is its third largest market and a driver for global manufacturing, has only experienced a tepid recovery after last year’s zero-Covid shutdown. Siemens noted a “normalization of demand” after customers pre-bought products last year to avoid shortages. In the three months ending in June, orders increased by 10%, compared to a 13% increase in the previous three months. CEO Roland Busch expressed confidence in the Chinese market, stating that he expects it to pick up within the next few quarters.

**Siemens’ Industrial Profit Declines 4% to 2.75 Billion Euros**

Siemens reported a 4% decline in its industrial profit for the three months ending in June. The industrial profit covers its mobility, smart infrastructure, and factory automation businesses. The company’s industrial profit amounted to 2.75 billion euros ($3.02 billion), missing analysts’ expectations of 2.90 billion euros. As a result, Siemens’ shares dropped 3.6% in premarket activity.

**Lowered Expectations for the Digital Industries Business**

While Siemens kept its group-level outlook for the year through September, it lowered expectations for its digital industries business. This division supplies factories with controllers and is considered the jewel in Siemens’ crown. The company now expects comparable revenue growth of 13% to 15%, which is lower than its previous outlook of 17% to 20%. Siemens’ order intake in digital industries experienced a significant decrease of 37% during the quarter, particularly in the short-cycle factory automation business.

**The Impact of Siemens’ Fortunes on the Global Economy**

Siemens’ performance provides valuable insight into the health of the global economy. As a manufacturer of products used to automate factories and equip transport networks, the fortunes of Siemens are closely tied to manufacturing activity worldwide. The recent slowing of manufacturing activity is evident in weakening purchasing manager data in Europe and China.

**Positive Order Intake and Revenue Growth**

Despite the challenges faced by Siemens, the company experienced positive developments during its third quarter. Order intake rose by 10% to 24.24 billion euros, surpassing forecasts of 22.19 billion euros. Additionally, revenue increased by 6% to 18.89 billion euros, although this figure fell short of the forecasted 19.27 billion euros. Net profit for the quarter amounted to 1.44 billion euros, which also missed expectations.

**Siemens Maintains Guidance at Group Level**

Siemens reaffirmed its guidance at the group level. The company expects comparable revenue growth of 9% to 11% for the 12 months ending in September, along with earnings per share ranging from 9.60 to 9.90 euros.

**Conclusion**

Siemens’ recent earnings report highlights the impact of weakening demand in China on the company’s profit forecasts. However, CEO Roland Busch remains optimistic about the Chinese market, anticipating a pick-up within the next few quarters. The company’s industrial profit declined by 4% to 2.75 billion euros, leading to a drop in its shares. Siemens also lowered expectations for its digital industries business, although it experienced positive order intake and revenue growth during the third quarter. The company’s performance serves as an indicator of the global economy’s health, particularly in the manufacturing sector. Despite the challenges it faces, Siemens maintains its guidance at the group level and expects continued growth in the coming months.