Siemens Posts Net Profit Rise on High Electrification Demand — Update

By Nina Kienle

Siemens posted higher third-quarter net profit and revenue, as it continues to benefit from high demand for electrical infrastructure driven by data centers and energy customers.

The German industrial giant said Thursday that for the quarter ended June 30 net profit increased to 1.98 billion euros ($2.16 billion) from EUR1.28 billion for the same period of the prior year. Analysts had forecast net profit at EUR1.80 billion, according to consensus estimates provided by Visible Alpha.

Revenue rose to EUR18.90 billion from EUR18.15 billion. Orders amounted to EUR19.78 billion, down from EUR23.49 billion.

Analysts saw revenue and order intake at EUR18.91 billion and EUR19.18 billion, respectively, according to consensus estimates provided by the company.

Profit from industrial business rose 11% to EUR3.03 billion, with a margin increase to 16.5%.

Siemens saw significant order growth on contributions from all businesses, most notably the electrification and buildings businesses, it said. The group saw order intake that included a number of larger contracts from data center and energy customers.

Industrial companies that have reported so far this earnings season said they experienced strong demand from data centers amid a surge in construction activity driven by artificial intelligence. European peers ABB and Schneider Electric said results benefited from data-center demand. In the U.S., Eaton said stronger-than-expected growth in data centers was a key reason behind an increase in its sales growth guidance for the year.

The rise of AI could drive around 10% to 20% growth a year in the global data-center market over the next decade, potentially ushering in a new era of growth for electricity demand, Jefferies analysts said in a recent note to clients.

"Another growth driver was our particularly strong industrial software business, which won several large license contracts. The industrial automation business remains challenging," Chief Executive Roland Busch said.

For the fiscal year ending in September, the company backed its outlook as given in the prior quarter. It continues to expect comparable revenue growth for the Siemens Group and profit margin for Digital Industries expected at the lower end of the previously-guided range and profit margin for Smart Infrastructure expected is at the upper end of the range, it said.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

August 08, 2024 02:31 ET (06:31 GMT)

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