Siemens revenue climbs on robust demand for rail products

[FRANKFURT] Siemens’s revenue and orders rose in its fiscal third quarter after robust demand for the German industrial manufacturer’s rail products offset a sharp decline at the software business.

Comparable revenue for the period rose 5 per cent to 19.4 billion euros (S$29 billion), Siemens said on Thursday (Aug 7). Orders at the mobility division more than tripled, including a 3.5 billion euros deal for a turnkey rail system in Egypt. The company confirmed its full-year guidance.

There were several weak spots. At Siemens’ digital industries division, which makes factory-automation devices controlling the flow of production, revenue fell. While the automation business grew in China and the US, software sales slumped after a strong prior-year period. Like most manufacturers, the German manufacturer is also contending with higher tariffs.

Siemens has been grappling with a downturn in China that has dragged down sales of its factory-automation equipment. It’s been relying instead on growing demand for rail and especially electrification products, an industry benefiting from massive investments in power-hungry data centres for artificial intelligence (AI) applications.

Siemens Energy, which was spun out of Siemens in 2020, this week said that it expects to reach the upper end of its full-year guidance on the back of strong demand for gas turbines. ABB in July reported record order intake and better-than-expected margins for its second quarter, spurred by rising demand for automation tools and data centre-driven investments in electrical grids.

To improve profitability, Siemens is pivoting towards software-driven product lines in all its units. The company agreed last year to buy software maker Altair Engineering for an enterprise value of US$10 billion as it bets on growing demand in the industrial software sector due to the growing adoption of AI. BLOOMBERG