Siemens reported better-than-expected quarterly profit at its industrial business on Wednesday and raised its full-year sales and profit guidance, boosted by a strong start to its 2023 fiscal year.
The builder of trains and industrial software reported profit at its industrial business of 2.7 billion euros ($2.90 billion) in the fiscal first quarter to the end of December, beating forecasts for 2.50 billion euros in a company-gathered consensus of analyst forecasts.
Chief Executive Roland Busch said the company had made its strongest-ever start to a financial year, helped by working through a large order backlog.
Like other industrial companies, Siemens saw a big surge in orders last year as customers brought forward their orders to avoid supply chain disruptions caused by gummed-up logistics chains and a shortage of key parts like semi-conductor chips.
“Our revenue grew by 8%, for digital industries and smart infrastructure revenue grew by 15%, and we have a record high order backlog of 102 billion, and profitability came in strong too, so therefore we had the confidence to raise the guidance,” Busch told CNBC’s Annette Weisbach Thursday.
Pre-announcing the results, which had been due to be published on Thursday, Siemens said it now expects full-year revenue growth of 7% to 10%. Previously it had expected an increase of 6% to 9%.
It also raised its profit guidance, saying it expected basic earnings per shares between 8.90 and 9.40 euros, up from 8.70 to 9.2 euros guidance it gave last November.
Much of the increase is expected to come from digital industries – Siemens’s factory automation business. Smart Infrastructure – which makes products to automate and control buildings – also raised its sales and profit margin guidance.
Busch also said Siemens was “quite optimistic” about growth in China following the country’s reopening, and praised the Inflation Reduction Act.
“The Inflation Reduction Act is positive, we see it positively, because it does really support green technology, which helps a lot of course,” Busch told CNBC.
Chief Financial Officer Ralf Thomas said Siemens had made a “temporary and deliberate build-up of critical inventories,” to enable it to meet customer demand in the months ahead.
During the October to December period, Siemens said its revenue had increased 8% to 18.1 billion euros, matching estimates.
Shareholders’ net profit fell to 1.48 billion euros, in line with forecasts.
The results of Siemens, whose sensors, components and software are used in factories, transport systems and buildings are seen as indicators for the health of the broader industrial economy.
Fellow industrial automation company Rockwell Automation last month reported a 9.9% increase in first quarter organic sales, and raised its sales growth outlook.
Swiss rival ABB last week said it also expected a strong start to 2023, with revenue growth in the double digit percentage range in the first three months of 2023.
— CNBC contributed to this report.