By John Revill
ZURICH (Reuters) -Siemens shares surged on Thursday after the German technology and engineering group’s fourth quarter results beat forecasts and it gave a confident outlook about future industrial demand.
The trains to factory software group’s shares were the biggest gainer among European industrial companies, rising 8% after analysts and investors cheered the update.
Siemens’s order backlog of 102 billion euros ($105.7 billion) as at end-September underpinned Chief Executive Roland Busch’s confident mood. He said the company also had the products to improve customers’ productivity while reducing their energy consumption.
“We are confident to continue a strong business trajectory in the 2023 business year,” Busch told journalists. “We don’t see any softening of demand regarding the conversion of our backlog into revenue.”
“Strong demand continues for our hardware and software offerings, including higher than expected growth for our digital business revenue,” he added.
Still, the company expects a normalisation in new order intake after previous quarters had seen increases of up to 73% as customers raced to get the latest industrial controllers and drives amid fears over component shortages.
Siemens itself had avoided major supply chain disruptions, and said bottlenecks were easing.
STRONG FINISH
The results of Siemens, and peers like Switzerland’s ABB and France’s Schneider Electric, are seen as barometers for the global world economy, with their products used to automate factories, manage buildings and develop transport networks.
Siemens now expects revenue to grow by 6% to 9% during its 2023 fiscal year. The company would see early signs of an industrial slowdown if customers cancelled their orders, but this had not materialised.
“At the moment it is very healthy in terms of advance payments and there are no cancellations and no large deferrals,” Chief Financial Officer Ralf Thomas said.
In the three months to Sept. 30, Siemens’s industrial profit rose 38% to 3.16 billion euros ($3.28 billion), beating forecasts for 2.79 billion euros in a company-gathered consensus of analysts.
Sales increased 18% to 20.57 billion euros – ahead of 19.13 billion euros forecast, while orders during the period rose to a better than expected 21.82 billion euros.
“Siemens reported a strong finish to FY22,” said Jefferies analyst Simon Toennessen. “For FY23 management provides a very bullish guide.”
Siemens also said it would combine five of its businesses into an independent motors and drives company with revenue of around 3 billion euros.
All options including a sale, spin-off to shareholders and flotation, were under consideration, with a decision not expected next year before taking action in 2024.
($1 = 0.9646 euros)
(Reporting by John Revill, editing by Rachel More, Rashmi Aich and Emelia Sithole-Matarise)