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Siemens posts industrial profit drop as automation division slows

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15 November 2023, Bavaria, Munich: Flags with the word “Siemens” in front of the company’s headquarters.

Karl-Josef Hildenbrand | Picture Alliance | Getty Images

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German technology giant Siemens on Thursday reported a drop in profit at its industrial business in the fiscal second quarter and said its automation division had slowed.

The company’s industrial profit came in at 2.51 billion euro ($2.73 billion) in the three months ending in March, down 2% from the same quarter last year. The figure was also below the company-compiled analyst forecast of 2.68 billion euro which was reported by Reuters.

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Net income fell to 2.2 billion euro in the three months to the end of March, down 38% year-on-year, while sales shed 1% to 19.16 billion euro.

Shares in Siemens were last 2.4% lower at 8:51 a.m. London time on Thursday.

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'No doubt' that China will come back, but may take several quarters, Siemens CEO says

Siemens focuses on automation and digitalization and produces technology for a range of sectors such as transport and healthcare.

The company said that its automation division, which is part of its digital industries business, declined sharply.

“We see a decline of minus 20%. However you have to see that against the backdrop of a record-high prior quarter and you see still a weakness in the Chinese market, so overall there are no structural reasons for that,” Siemens CEO Roland Busch told CNBC’s Annette Weisbach on Thursday.

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The quarter was overall “solid,” Busch said. “Demand for our products is strong and our growth drivers digitalisation and sustainability they’re full intact.”

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Busch said there had been a “huge uptick” in demand for automation in recent years, which drove stock levels higher. Reducing this now is taking some time and causing a “destocking effect,” he said.

“It takes a little bit longer because of the demand is not that high and we are reducing the stock as we go,” Busch added.

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Lower demand in China is driven by weaker private consumption, exports not accelerating and less direct investment in the country, he said — but there was “no doubt” that China will be back eventually.

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