Siemens sees higher margins in its three key divisions next year, defying pressure from a global economic slowdown on the back of a record-high order book.
The group reported net income more than doubling to €2.7 billion for the financial fourth quarter that runs through September, Siemens said on Thursday, in line with consensus estimates. The return on sales at its main Digital Industries division is forecast to rise to as much as 22 per cent next fiscal year, up from 20 per cent in the annual period just ended.
All its industrial businesses saw order intake and revenue rise last year, even as sanctions on Russia, high inflation and supply-chain problems weighed, Siemens said. The German company is still grappling with finding a future for its business in Russia, which the company abandoned earlier this year, ending a 170-year presence in the country that led to impairments of €1.2 billion.
“We see a levelling off of the order intake as you go forward, chief executive Roland Busch said in an interview. “But you have to keep in mind, this comes from an extremely high level.”
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Siemens is nearing the end of a big revamp of its business from heavy-duty equipment toward higher-margin, software-driven product lines
The engineering giant proposed increasing its dividend to €4.25 from €4.00, and sees basic earnings per share in a range between €8.70 to €9.20. That’s up from €8.84 in the previous year, excluding an impairment on the company’s stake in Siemens Energy.
Manufacturers such as Siemens have held up remarkably well despite a dimming global outlook marked by record inflation and unresolved supply-chain problems. The crunch on components has resulted in significant order backlogs that will take months to work down. Siemens said in August it expects a normalisation of new orders in the coming months.
Orders during fiscal 2022 climbed 17 per cent, taking the backlog to a record €102 billion, Siemens said.
Siemens is nearing the end of a big revamp of its business from heavy-duty equipment such as industrial robots and trains toward higher-margin, software-driven product lines to catch up with the profitability levels of rivals. It has offloaded most of the smaller divisions destined for divestment, alongside spin-offs of businesses such as gas turbine maker Siemens Energy and healthcare equipment maker Siemens Healthineers.
In the key Digital Industries division, which makes factory automation software, Siemens sees a profit margin in the range of 19 per cent to 22 per cent.
For the Smart infrastructure unit, Siemens forecast returns between 13 per cent to 14 per cent. In the Mobility division, returns are expected to range at 8 per cent to 10 per cent. – Bloomberg
