Siemens sales outlook beats forecasts after record Q4

By Christoph Steitz and Alexander Hübner

FRANKFURT/MUNICH (Reuters) -Siemens on Thursday said sales growth would slow in 2024 but still beat expectations with an outlook that factors in continuing destocking by customers in its key market China, sending shares to their highest in more than three months.

The German group, whose products are used to automate factories and buildings, said it expected revenue growth of 4-8% in the next 12 months, less than the 11% increase recorded for its 2023 business year.

But that’s still significantly higher than the 3.7% LSEG estimate, causing Siemens shares to rise as much as 6.6% to the top of Germany’s blue-chip index and making them the second-biggest gainers on the pan European .

At its key industrial automation unit, the group expects “soft economic development with sluggish demand – especially in China and Germany – and with destocking in key countries” in the first half of fiscal 2024, finance chief Ralf Thomas said.

“We assume that improving trends will begin to materialize in the second half of fiscal 2024,” he told journalists at the group’s annual press conference.

Siemens is the latest company to highlight tougher market conditions, with Swiss rival ABB (ST:) last month flagging falling orders in China.

Shares were supported by record results for the July-September quarter, which showed sales rising 10% to 21.4 billion euros ($23.19 billion), beating the 20.99 billion euros forecast in a company-gathered poll of analysts.

Industrial profit too grew 7% to a record 3.4 billion euros, above the 3.34 billion euros forecast.

“Siemens beat on all metrics in Q4,” analysts at Deutsche Bank wrote, also pointing to the group’s “outstanding” record free cash flow of 10 billion euros.

Siemens has been seeing demand levels return to normal in recent months after a post-pandemic jump when customers ramped up production and pre-ordered in bulk to avoid shortages of key components.

The company has also been working through its massive order book, which stood at 111 billion euros at the end of September, up from 110 billion euros at the end of June.

Siemens AG (OTC:)’s strong results come a day after former division Siemens Energy unveiled a $5 billion net loss along with an agreement around 15 billion euros in project-related guarantees also supported by Siemens.

Busch said Siemens AG would continue to reduce the 25.1% stake it still holds in Siemens Energy, currently worth 2.18 billion euros, adding this would happen with market conditions in mind.

($1 = 0.9228 euros)