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Siemens warned of slowing sales growth in the next year owing to flat growth in China, even as it reported record profits in its flagship industrial business.
The Munich-based industrial group on Thursday said profit margins in its industrial business arm hit a record 15.4 per cent on the back of sales growth of 11 per cent in the past fiscal year ending in September.
Sales next year were likely to grow between 4 per cent and 8 per cent, the company said, pointing to relatively weak expectations for its industrial automation business, which has been particularly reliant on China.
Roland Busch, chief executive, said China had “some problems” at the moment. “The property market was overheated, private consumption is not picking up after the pandemic as we had hoped. The global economy is weak, which is a problem for a country that exports a lot. The ageing population also plays a role,” he said.
Siemens said its expectations for flat growth in its industrial automation arm was based on “the assumption that following destocking by customers, global demand in the automation businesses, especially in China, will pick up again in the second half of the fiscal year”.
The company said it planned to raise its dividend to €4.70 a share. Its share price has risen nearly 15 per cent in the past year.
The group has in the past couple of years transformed from a sprawling engineering company that made products such as washing machines to a tech company focused on developing digital tools for industrial use and other high-margin businesses.
It also laid out plans to float its motors and large-drive business Innomotics, after having already separated the business with 15,000 employees.
In 2015, Siemens sold its 50 per cent stake in its home appliances joint venture to Bosch, the German engineering and technology company, and it still holds stakes in several of its former companies, such as a 25 per cent stake in ailing Siemens Energy.
The company does not consolidate the earnings of Siemens Energy, which yesterday reported a full-year net loss of €4.6bn after having agreed to a €15bn government-led rescue plan, as the company is separate, and was “not in our control”.
Siemens agreed to buy an 18 per cent stake in an Indian joint venture for €2.1bn from its former energy unit as part of the rescue deal, in which Berlin has committed to providing the company with €7.5bn in credit guarantees,
The rescue deal will include €12bn lent by banks, to try and shore up Siemens Energy’s order book.
Busch said the package would provide liquidity so that Siemens Energy could retain and continue to defend its credit rating while solving the problems at its wind unit.
