Siemens seeing ‘normalisation’ in demand after Q3 misses forecasts

By John Revill

ZURICH (Reuters) -Siemens on Thursday said it is seeing a “normalisation in demand”, particularly in China, as the German engineering group reported third-quarter profit which missed forecasts.

The trains-to-factory-automation maker posted industrial profit that fell 4% to 2.75 billion euros ($3.02 billion) for the three months to June-end, missing the 2.90 billion euro analyst forecast in a company-compiled consensus.

Siemens kept its group-level outlook for the year to September-end but lowered expectations for its digital industries business which supplies factories with controllers.

The division, seen by analysts as the jewel in Siemens’s crown, now expects comparable revenue growth of 13% to 15%, rather than 17% to 20% expected previously.

Chief Executive Roland Busch highlighted weakening demand after customers in previous quarters had pre-ordered products to avoid shortages.

“We have seen a normalisation of demand, particularly in China and in short-cycle business,” he said in a statement.

Order intake at digital industries plunged 37% during the quarter, particularly in the short-cycle factory automation business, Siemens said.

“Orders declined in all regions, most notably in China,” its third-biggest market, the company said.

Still, the division increased revenue and profit as it worked through its huge order book, and benefited from higher capacity utilisation at its own factories and being able to sell more profitable products.

The fortunes of Siemens, whose products are used to automate factories and equip transport networks, give an insight into the health of the global economy.

Manufacturing activity has been slowing in recent months with weakening purchasing manager data in Europe and China.

Still, there has been a mixed picture, with German industry – which has been in the doldrums – showing rising orders, recent data showed.

During its third quarter, Siemens, for which Germany is its second-biggest market, said orders rose 10% to 24.24 billion euros, beating forecasts for 22.19 billion euros.

Revenue rose 6% to 18.89 billion, missing forecasts for 19.27 billion euros. Net profit of 1.44 billion euros also missed forecasts.

Despite the more downbeat view for digital industries, Siemens maintained its guidance at group level. It expects comparable revenue growth of 9% to 11% for the 12 months to September-end and earnings per share of 9.60 to 9.90 euros.

($1 = 0.9106 euros)