MUNICH (dpa-AFX) - The technology group Siemens can look forward to continued good business with intelligent infrastructure. The company therefore increased sales and profits in the third quarter. "We continued to benefit from the sustained high demand for electrification," commented CEO Roland Busch on the development. The industrial software business also proved robust. In contrast, factory automation, which has long driven growth in the Group, remains subdued - the recovery will take longer than expected. The reduction of customers' full inventories is dragging on, particularly in China. In addition, the resulting increase in competition is leading to price pressure in the region.

The share lost 1.4 percent on Thursday morning. Analysts were quite positive in their initial assessment, pointing to strong results in Smart Infrastructures and Software. However, Bernstein analyst Nicholas Green criticized the weak performance of the train division and the problems in the automation business.

In the third quarter (as at the end of June), revenue rose by four percent to 18.9 billion euros, as the company announced in Munich. Comparable growth amounted to five percent. This excludes currency and portfolio effects.

The result of the industrial business, which reflects the operational development, increased by eleven percent to 3 billion euros. In addition to Smart Infrastructure, the recovery of the medical technology subsidiary Siemens Healthineers also contributed to this. After taxes, Siemens earned €2.1 billion, almost half more than in the previous year. The figures were better than analysts had expected.

The Smart Infrastructure division made the largest contribution to growth with a double-digit percentage increase; the electrification business in particular grew significantly. "We are benefiting from the boom in artificial intelligence and the accelerated energy transition," said Busch, explaining the growth. "On the one hand, many new data centers are being built and, on the other, the power grids are being expanded to accommodate more renewable energy."

In Digital Industries, the division with the highest margins, a strong software business was unable to compensate for the sluggish development in industrial automation. Busch referred to the continuing difficult economic situation in Europe and China. "The investment climate is poor in important sectors such as mechanical engineering and the automotive industry." The situation is likely to remain "challenging". "We therefore expect demand to recover more slowly than originally assumed."

CFO Ralf Thomas assumes that the reduction of inventories in China will continue "well into the 2025 financial year". In Europe and the USA, the manager continues to assume that inventories will largely normalize by the end of the 2024 financial year (as at the end of September). "In the fourth quarter, lower capacity utilization in the automation business and a less favourable product mix will weigh on margins," he estimates.

Nevertheless, the Group has confirmed its forecast for the year. However, the margin in the digital business is likely to be at the lower end of the stated range, it said. Siemens had already lowered its forecast for the division in the second quarter. In Smart Infrastructure, on the other hand, the Group expects a margin at the upper end of the range.

For the Group, CEO Busch continues to expect revenue growth on a comparable basis of four to eight percent. The company confirmed that the increase is likely to be at the lower end of the range.

Siemens expects earnings per share before certain purchase price effects following acquisitions to be between 10.40 and 11.00 euros. In the previous year, the corresponding profit rose to 9.93 euros. This excludes the investment in Siemens Energy, which is now only recognized as a financial asset and no longer in the income statement.

Siemens can continue to look back on a robust order book. In the third quarter, new business fell by 16 percent. This was due in particular to the decline in the Mobility train division, which had benefited from major orders in the same period of the previous year. Smart Infrastructure, on the other hand, recorded double-digit percentage growth. In the Digital division, new software business grew strongly thanks to a series of large orders for licensed software, as Siemens also reported. However, this is unlikely to be repeated. The order intake in automation, on the other hand, fell "moderately", as was reported./nas/niw/mis