• Key digital industries unit sees slower-than-expected business
  • Shares drop most in seven months after CFO flags muted demand

Siemens AG fell the most in seven months after flagging disappointing demand in China for its key digital industries division.

New business for the unit that makes factory-automation products has been slower than expected in Siemens’s third-biggest market since the start of the year, Chief Financial Officer Ralf Thomas said Tuesday. China’s slow recovery is also resulting in lower demand in central Europe.

China’s economic stimulus “doesn’t immediately translate into new orders at the moment,” Thomas said at an investor conference in London.

The industrial sector is grappling with weaker demand in China, where consumers and businesses have cut back on spending amid rising inflation and interest rates. Siemens, which has many European customers that export to China, expects the Asian country’s economy to recover in the second half with Beijing’s push to boost high-tech manufacturing.

Siemens slumped as much as 6.9%, the steepest intraday decline since Aug. 10. The stock is still up nearly a quarter in the past year.

Bloomberg Intelligence analyst says:

Siemens Digital Industries’ margin in fiscal 2Q could trend below the 20-23% 2024 guidance amid low capacity utilization, dilution from software and product-mix headwinds. The automation unit’s fiscal 1H order prospects and 2024 sales forecast rely on China’s recovery (along with Germany) and a slow demand pickup from the countries — based on the CFO’s comments at a Bank of America conference — may pause sequential order growth in 2Q.

 Omid Vaziri, BI industrials analyst

Orders at Siemens’s digital industries division fell 31% in the fiscal first quarter after new business in China more than halved. Siemens has in recent years revamped its business to focus on software-driven product lines with higher profitability levels. The unit’s software businesses are doing better than expected, Thomas said Tuesday.

Written by: @Bloomberg

 BullsNBears.com was founded to educate investors about the eight secular bear markets which have occurred in the US since 1802.  The site publishes bear market investing recommendations, strategies and articles by its analysts and unaffiliated third-party and qualified expert contributors.

No Solicitation or Investment Advice: The material contained in this article or report is for informational purposes only and is not a solicitation for any action to be taken based upon such material. The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this article or report does not constitute a representation that the investments or the investable markets described herein are suitable or appropriate for any person or entity.