Siemens AG shares fall as DI outlook clouds strong Q3 results

Investing.com — Shares of Siemens AG (ETR:) fell after the company reported its Q3 results, which, while exceeding expectations, presented a mixed outlook, particularly concerning its Digital Industries (DI) segment.

At 5:48 am (0948 GMT), Siemens was trading 1.2% lower at €157.38.

“The downside risks in DI have been a major focus in 2024 and while there was a strong software driven Q3 beat, the outlook implies a further drop in margins in Q4,” said analysts at RBC Capital Markets in a note. 

The tech conglomerate’s industrial profit exceeded expectations by 7%, while EPS was 12% higher than anticipated. 

The standout performance was driven largely by Digital Industries (DI), particularly in the software segment, which saw a 82% jump in  revenue growth. 

“However, we do move our 2025E forecast margin to the low end of the Siemens divisional target range for DI of 17-23%, and this is on limited volume growth,” the analysts said. 

DI Automation faced a 25% sales decline due to ongoing destocking, particularly in Europe and the US, though China showed a 25% year-on-year increase in orders.

The Smart Infrastructure (SI) segment also performed robustly, with 21% revenue growth in Electrification, supporting margins through capacity utilization. 

Siemens Healthineers, however, missed expectations by 7%, aligning with its Q3 reporting after accounting adjustments.

Siemens reiterated its FY guidance but indicated that group sales growth would be at the lower end of the 4-8% target range. 

DI margins are expected to be at the lower end of the 18-21% range, while SI margins are anticipated to be at the upper end of the 16-17% range. Mobility is projected to achieve 8-11% revenue growth with margins between 8-10%.

Consensus currently expects 4.3% group organic growth and EPS pre PPA and Siemens Energy of EUR 10.43. The significant Q3 software activity is not expected to carry over into Q4, which may lead to lower DI margins, estimated to drop to the low to mid-teens range.