The German multinational Siemens has earned 8,529 million euros in its 2023 financial year, which runs from October 1, 2022 to September 30. The profit practically doubles that achieved last year, when it obtained 4.4 billion, weighed down by the poor behavior of Siemens Energy. Although this subsidiary, of which it owns 25.1%, continues to be a source of problems – the German Government has just rescued it with guarantees for its heavy losses, derived mainly from the Spanish Gamesa -, the recovery has materialized in the last 12 months, in part thanks to the strong diversification of the company, with tentacles in businesses such as household appliances, computer solutions, infrastructure or health, among others.
The German group’s accounts have beaten analysts’ forecasts, and its shares appreciated 5% at the beginning of the trading session, accumulating an increase of more than 20% in 12 months. Another announcement has contributed to this: the Munich-based firm will propose to the shareholders’ meeting an increase in the annual dividend of more than 10%, from the current 4.25 euros to 4.70 euros. “Fiscal year 2023 was a year of multiple records: in our industrial business, profits and profit margin reached the highest levels ever recorded, and we almost doubled our net profit to an all-time high,” said Roland Busch, president and CEO of Siemens.
The digital business was the one that contributed the most to profit (4,833 million before taxes), followed by the intelligent infrastructure division (3,074 million), the health leg (2,527 million), and the mobility leg (882 million). Together they make up Siemens’ industrial business, which earned 11.4 billion before meeting the German treasury, above the 10.3 billion in 2022. And the margin improved three tenths, from 15.1% to 15.4%. As for the order book, it grew by 7% during the year, to 92.3 billion, and total revenues increased by 11%, to 77.8 billion—10% in the fourth quarter.
The good news is less so when we look to the future. Siemens’ forecasts for the 2024 financial year speak of a slowdown in a context of uncertainty for the Chinese economy, a key destination for its production. Siemens places the range of income increase for the next year between 4 and 8%, below that obtained in 2023. With the war in Ukraine still without any signs of a solution and the new open conflict in Palestine, the company recognizes that its Outlook “is based on the assumption that geopolitical tensions do not continue to increase,” so any change for the worse could deteriorate these numbers. Russia had a negative impact of 300 million in the fourth quarter.
Siemens’ transition from its position as a manufacturer of machinery and appliances to a technological profile is behind its recent success. That is why the progress of its digital division is being looked at with a magnifying glass, to which by 2024 it only grants an income advance of between 0 and 3% to which it also puts nuances. He explains that it is based on the assumption that global demand in automation businesses will recover in the second half of the fiscal year “especially in China.” The situation seems clearer for the area of smart infrastructure, which will grow between 7 and 10% in 2024 according to the company, and for mobility (between 8 and 11% progress).
The 25.1% stake in Siemens Energy, under the spotlight due to the difficulties in making the purchase of the Spanish company Gamesa profitable, was valued at the end of the year at 1.8 billion. Although Siemens does not consolidate in its accounts the results of Siemens Energy, which announced losses of 4.6 billion euros this Wednesday, its exposure to this business had a negative impact of 234 million in the fourth quarter. To alleviate the situation of Siemens Energy, to which Germany will provide financial support of 7.5 billion in guarantees, the conglomerate has agreed to acquire an 18% stake in its Indian unit for 2.1 billion euros.
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