MUNICH (dpa-AFX) - Subdued demand in its automation business weighed on the technology group Siemens in the second quarter. However, a better development in the other areas almost compensated for this. Siemens confirmed its forecast when presenting its figures in Munich on Thursday, but became more pessimistic for its Digital Industries division. The reduction of full inventories at customers in the automation business is likely to take longer than expected, particularly in China, it said. Siemens raised the lower end of the expected range for sales and profitability for its smart infrastructure business, which is performing well.

The share price, which had reached a record high of 188.88 euros at the beginning of the week and thus increased by 58 percent since the end of October alone, fell by around 2.5 percent in the morning to the 183 euro mark. It thus continued its correction. Deutsche Bank analyst Gael de-Bray described the quarter as "subdued".

Expert Mark Fielding from the Canadian bank RBC also spoke of mixed results from the Munich-based company. The disappointing profit development in the industrial business was mainly due to Siemens Healthineers, as well as the Digital Industries (DI) division. In contrast, the surprisingly high earnings per share benefited from a positive tax effect.

The reduction in the Digital Industries division was foreseeable, according to Andrew Wilson from JPMorgan. However, this was greater than the market had expected. The problems were driven purely by industrial automation, while the software business continued to develop strongly.

"We delivered a solid performance in the second quarter. We are resilient in a time that continues to be characterized by a cautious economic situation," said Group CEO Roland Busch in a conference call. He referred to the further increase in the order backlog, which had reached a record level of 114 billion euros at the end of March.

According to Busch, demand in the factory automation business remained subdued. Stock levels at customers and sales partners remained high, particularly in China, the manager explained. "We expect the situation to improve steadily over the coming quarters, but at a slower pace than previously expected." The main reason for this is the restrained development in China, also due to overcapacity in certain customer sectors, such as solar energy or electric cars. "In addition, the important export-driven markets in Europe, such as Germany, are only picking up very slowly."

Turnover fell by one percent to 19.2 billion euros in the three months to the end of March, the company reported. The result of the industrial business fell by two percent to 2.5 billion euros. Siemens was almost able to compensate for declines in automation with better development in other areas. On the bottom line, profit fell by 38 percent to around 2.2 billion euros, with Siemens benefiting from a write-up at its subsidiary Siemens Energy in the same quarter of the previous year.

For the current fiscal year 2023/24 (as of the end of September), Siemens continues to expect revenue growth on a comparable basis of four to eight percent. This excludes currency and portfolio effects. The increase is likely to be at the lower end of the range, said CFO Ralf Thomas in the conference call. This is in line with current analyst estimates, which currently assume average growth of 4.5 percent. Siemens now expects a comparable decline in sales for DI. The company had previously forecast stable to slightly rising revenues. Demand in industrial automation is expected to pick up again in the second half of the fiscal year, and Siemens is also anticipating large orders in the software business.

Siemens expects earnings per share before certain purchase price effects following acquisitions to be between 10.40 and 11.00 euros. Last year, the corresponding profit rose to 9.93 euros. This excludes the investment in Siemens Energy, which is now only recognized as a financial asset and no longer in the income statement.

Meanwhile, Siemens has made further progress in optimizing its portfolio and has found a buyer for its subsidiary Innomotics. The division for motors and large gearboxes with around 15,000 employees is to be sold to the US investment company KPS for 3.5 billion euros. The price is above analysts' expectations. According to Siemens, the deal is expected to be completed in the first half of the 2024/2025 financial year. Group CEO Busch put the resulting book profit after tax at around two billion euros. The transaction still has to be approved by the merger control authorities, among others. Siemens has wanted to divest itself of the business for some time and has made the division independent. A Borsengang was also being examined./nas/lew/jha/