With a loss of 5.5 percent to 173.54 euros, they were at the bottom of the slightly rising DAX in the afternoon and were once again approaching the 50-day line, which provides an indication of the medium-term price trend.
At the Bank of America investor conference, the Munich technology group struck a more pessimistic tone, said a stock exchange investor. Order growth is poor, especially demand from China.
Analyst Andrew Wilson from JPMorgan wrote that CFO Ralf Thomas had dampened expectations for the second quarter for the Digital Industries division. The reason is a slower business recovery in China. Despite confirming the annual targets, Wilson now sees clear risks to the sales forecast for this business. Investors are likely to factor in a reduction.
However, expert Mark Fielding from the Canadian bank RBC did not see the caution of the Siemens CFO as a broken leg in view of the entire group. A less strong development in the Digital Industries area could be offset by a better performance in the Smart Infrastructure business unit, according to the expert.
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Siemens shares reached a record high of almost 187 euros on Friday. In the current year they had gained ten percent. In the meantime, however, the increase has dwindled to just over two percent. In Siemens’ wake, the securities of competitors Schneider Electric and ABB (ABB (Asea Brown Boveri)) also reacted negatively on Tuesday.
Siemens expects longer headwinds in the automation division
The wind in the Digital Industries automation division is likely to blow in Siemens’ face for longer than expected.
In China and Europe in particular, the economic environment in factory automation is more difficult than expected in the short term, said CFO Ralf Thomas on Tuesday at a Bank of America investor conference. Therefore, unlike expected, the order intake of the flagship Digital Industries (DI) in the current second quarter (January to March) will only be at the level of the first quarter of 2023/24. Sales are likely to be a good ten percent below the previous year, said Thomas. This will also have an impact on the operating margin: it will now be 17 percent in the quarter rather than the expected 20 percent. In the software business, however, things are going well.
“The destocking will take longer than expected, probably until the end of the year,” Thomas said, according to a recording of the event. This shocked investors, who pushed Siemens shares down by up to five percent to 173 euros. In February, the CFO had expected that customer inventories in Europe and the USA would largely return to normal by the middle of the year; only in China could this take until the second half of the year. Now Thomas also believes it is possible that the division will not grow at all or even shrink slightly over the year as a whole – but it is too early to say with certainty. Previously, Siemens had promised a sales increase of zero to three percent for DI.
However, Thomas reiterated that Siemens would still achieve its goals for the group in the current financial year (end of September). This is also due to the building technology and infrastructure division Smart Infrastructure. Sales there in the second quarter will be at the upper end of expectations of five to seven percent. The operating margin will match the level of the previous year’s quarter (15.9 percent) – that would be more than the 15 percent previously forecast.
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FRANKFURT (dpa-AFX) / (Reuters)
Image source: MICHELE TANTUSSI/AFP//Getty Images, Siemens press photo, A.Penkov / Shutterstock, ricochet64 / Shutterstock.com