Siemens falls more than 5% on lower profits, slowing its automation division

Shares of German technology giant Siemens fell more than 5% on Thursday after the company reported a decline in fiscal second-quarter profit and said its automation division had slowed.

The company’s industrial profit was 2.51 billion euros ($2.73 billion) for the quarter ended March, down 2% from the same quarter last year. This figure is also lower than analysts’ forecasts of 2.68 billion euros reported by Reuters.

Net profit fell to 2.2 billion euros in the quarter ended March, down 38% year-on-year, while sales fell 1% to 19.16 billion euros.

Siemens shares were trading down about 5.1% as of 11:49 a.m. London time.

Siemens focuses on automation and digitalization and produces technologies for a range of sectors such as transport and healthcare.

The company said its automation division, part of its digital industries business, declined sharply.

“We see a decline of minus 20%. However, this must be taken into account in the context of a record previous quarter and continued weakness in the Chinese market. So overall there is no structural reason for this.” , said the CEO of Siemens. Roland Busch told CNBC’s Annette Weisbach on Thursday.

The quarter was “solid” overall, Busch said. “Demand for our products is strong and our growth drivers, digitalization and sustainability, are fully intact.”

Busch said there has been a “sharp increase” in demand for automation in recent years, which has driven up inventory levels. Reducing that now takes time and causes a “destocking effect,” he said.

“It’s taking a little longer because demand isn’t that high and we’re reducing inventory as we go,” Busch added.

The decline in demand in China is due to weaker private consumption, exports that are not accelerating and a decrease in direct investment in the country, he said – but there is ” no doubt” that China will eventually come back.