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Weakening demand hits Siemens’ profits

Posted on 28 Aug 2019 and read 1056 times
Weakening demand hits Siemens’ profitsAccording to a Reuters report, Siemens said deteriorating demand from automotive and machine-building firms hit its third-quarter profit (April, May and June).

The company’s factory automation unit saw orders and revenue fall, due to customers in Europe and the Americas holding back on investments, as their economies slowed.

Profit margins also shrank, as Siemens sold less of its more profitable short-cycle products (such as industrial controllers and drives), cutting its net profit by 6%.

Chief executive Joe Kaeser said the ‘trains to turbines maker’ had seen conditions become much weaker in its key markets.

“As indicated some time ago, geo-politics and geo-economics are harming an otherwise positive investment sentiment.”

Earlier in August, shares in Siemens were down about 5%, after falling to their lowest level since February.

Siemens’ Swiss peer ABB recently warned aof a slowdown in China, with lower orders, while German luxury-car maker Daimler has also revised down its forecast for Mercedes-Benz car sales.

Other companies highlighting tougher conditions include the world’s biggest steel maker Arcelor Mittal, which has cut
its forecast for global steel demand (it now expects a sharper reduction in Europe, due to a ‘lean automotive market’).

Germany’s Rheinmetall also downgraded the forecast for its automotive division.

During its Q3, Munich-based Siemens reported net profit of 1.14 billion euros, down from 1.21 billion euros in Q3 2018.

That said, orders rose by 8% to 24.51 billion euros, revenue increased 4% to 21.28 billion euros, but operating profit in Siemens’ industrial business fell by 12%.