Siemens AG raised its annual guidance after better-than-expected sales and profit in its first quarter to Dec. 31 last year, the latest sign Europe’s biggest engineering company is benefiting from a strong rebound in China.
Siemens now sees full-year net income rising to as much as 5.5 billion euros (US$6.6 billion) from 4.2 billion euros last year, clearly above previous expectations for moderate growth, it said yesterday.
That is after comparable revenue increased in all four of its industrial businesses, including at its high-margin software segment.
Photo: AP
“Some of the industries we lead have recovered clearly faster than expected,” co-chief executive officer Roland Busch said. “China stood out clearly here: The Chinese economy has recovered from the downturn, and its gross domestic product is now higher than it was before the [COVID-19] pandemic.”
The raised outlook is a boon to long-time boss Joe Kaeser, who was to hand over the reigns of the German conglomerate to Busch later yesterday.
During his seven-year run, Kaeser streamlined Siemens’s sprawling conglomerate structure to help it focus on high-margin businesses, such as its factory-automation software.
Demand from China, which has roared back to pre-pandemic growth rates, has given key support to global trade and to some of Germany’s biggest exporters, including automakers Volkswagen AG and BMW AG.
Still, Siemens cautioned that it continues to expect a “complex” macroeconomic environment because of the pandemic and said its outlook is based on economies continuing to recover.
“It’s very uncertain what the global development will do in terms of both supply chain as well as, of course, on the demand side,” Kaeser said in an interview on Bloomberg TV.
“That’s why it’s so important that we get the vaccine rolled out to everybody,” he said.
Group sales rose 7 percent on a comparable basis in the first quarter, with operating profit at its industrial business jumping 39 percent.
In China, Siemens won orders to help BMW increase manufacturing capacity and digitize the factories of a local glassmaker.
In Egypt, the company signed a memorandum of understanding to build the country’s first high-speed rail system.
Siemens has weathered the pandemic better than some of its automotive and industrial clients partly because it was able to keep its factories running virtually uninterrupted.
It has also had an easier ride than US rival General Electric Co, which is reliant on aviation customers hit by a collapse in air travel.
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