Frankfurt (Germany) (AFP) – German industrial giant Siemens on Thursday raised its profit outlook for the second time this year after a quarter boosted by AI spending, but its shares plunged after the forecast fell short of investors’ hopes. Along with other industrial firms such as France’s Schneider Electric and Switzerland’s ABB, Siemens has benefitted from demand for data centres that provide the computing power for AI. The provider of electrical equipment now expects earnings per share, a measure of underlying profitability, of 11.20 to 11.50 euros for the year ($12.93 to $13.28), up from a range of 10.70 to 11.10 euros given in February.
“The data centre business is especially dynamic,” chief executive Roland Busch told reporters on a call. “The rapid build-out of cloud and AI infrastructure is continuing to drive demand high.” But Siemens shares dropped six percent in early Frankfurt trading, with analysts pointing to expectations of higher full-year profits, as well as fears that new AI tools will disrupt Siemens’s own software business. The earnings “uplift appears less pronounced than peers,” RBC bank analysts wrote in a note. “Uncertainty around factors such as the macro demand backdrop and AI software risks may still limit investor enthusiasm,” they added.
– Record orders –
Net profit for the three months to end-June rose 15 percent to 2.6 billion euros, Siemens said, while sales rose eight percent to 20.8 billion euros. Earnings growth was concentrated at Siemens’ Smart Infrastructure business, which supplies electrical equipment for data centres and other industrial customers, as well as the Digital Industries division, which focuses on software to automate processes. Order intake — an indicator of future sales — reached a record of 27.9 billion euros, up 14 percent from the period last year, leaving Siemens with a backlog of 132 billion euros’ worth of work. For the Smart Infrastructure division alone, orders jumped 42 percent.
Busch said he expected AI would also increasingly drive demand for Siemens’ software products. “The more AI functionality you see on the shop floor, the more compute you need,” he said. “This is part of our core portfolio.” Tracing its origins back to a telegraph company established in 1847, Siemens makes trains, industrial software, and medical and industrial machinery as well as electrical equipment.
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