German companies are starting to get burned in the back

Photo source: Siemens Gamesa via renews.biz

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Siemens said on Thursday it continued to see strong industrial demand in the third quarter, but costs related to its investment in Siemens Energy and a decision to exit Russia meant the engineering group posted its first quarterly loss in 12 years. .

The maker of industrial software and trains reported higher revenue and orders for the three months ended June, a positive sign for the health of the broader industrial sector.

In factory automation, subsidiaries in all regions reported orders 20 percent higher than in the same period last year, Siemens said, while higher component and logistics costs were offset by cost-shifting to customers.

Managing director Roland Busch said demand was still strong despite an environment affected by Russian sanctions, high inflation and the ongoing effects of the pandemic.

“We captured significant opportunities in a market environment with continuous high demand. Our strong growth has continued, with comparable order growth of 20% since the start of fiscal 2022,” he said in a statement.

The Siemens Group, whose products are used to equip factories, buildings and transport networks, is considered a benchmark for the industrial economy.

Demand in Europe’s capital goods sector is holding up, Barclays Bank said last week, citing results from other companies in the sector such as ABB and Schneider Electric.

Areas such as automobiles, machine building and electronics showed “continuous underlying growth momentum, with signs of some normalization,” Siemens’ financial director, Ralf Thomas, told reporters.

“Going forward, we expect a sequential normalization of demand for the fourth quarter and a gradual reduction in the order backlog in fiscal 2023,” Thomas said, adding that it would be unrealistic to expect order growth to remain above 30% on long term.

Orders rose 7 percent to 22.07 billion euros ($22.8 billion) in the third quarter, while profit at its industrial business rose 27 percent to 2.88 billion euros.

But the group posted a net loss attributable to shareholders of 1.66 billion euros after it booked 2.7 billion euros of non-cash costs for the downgrade of Siemens Energy.

Net profit was reduced by 558 million euros by Siemens’ decision to withdraw from Russia, following the conflict in Ukraine.