On Thursday, Siemens shares tumbled 5% in Frankfurt trading after the tech conglomerate reported a decline in second-quarter earnings for its industrial business, as prolonged destocking in China exceeded expectations.
For the January to March period, Siemens' industrial profit dropped 2% to €2.51 billion ($2.73 billion), missing the analyst consensus of €2.68 billion. Sales decreased by 1% to €19.16 billion, falling short of the expected €19.28 billion, while net profit dropped to €2.19 billion.
According to RBC Capital Markets, Healthineers, Siemens’s healthcare division, accounted for nearly all of the industrial profit shortfall, contributing to 5% of the 6% miss.
“Healthineers was the big miss as higher restructuring charges on top of higher base expectations in Siemens AG (OTC:SIEGY)' forecasts vs Healthineers’ analysts meant this was a 17% miss,” analysts at RBC Capital Markets commented.
“SI [Smart Infrastructure] was the only beat, driven by margins (+60bps beat) on high utilization and productivity measures,” they added.
Siemens said it expects the destocking trend in China to persist through 2024, although it believes stock levels in Europe and the United States could normalize by the end of September.
As a result, Siemens lowered its full-year outlook for its digital industries segment, now forecasting a sales decline of 4% to 8%.
However, Siemens confirmed its annual group sales outlook, expecting an increase of 4% to 8%, with Chief Financial Officer Ralf Thomas indicating the figure would likely be at the lower end of the range.