SIEGY Siemens AG (PK)

By Giulia Petroni

Siemens anticipates a slowdown in revenue growth next year, with global demand for automation products not expected to pick up again until the second half.

The German industrial conglomerate said Thursday that it is targeting revenue growth of between 4% and 8% on a comparable basis, compared with 11% growth in the current year. Revenue at the digital industries division, which sells automation equipment and software to industrial customers globally, should grow by up to 3% or stagnate, with demand in the automation businesses still recovering, especially in China.

"We expect fiscal 2024 to be more of a 'transitional year' before accelerated growth picks up again," Chief Financial Officer Ralf Thomas said. "For the first half, we anticipate a soft economic development with sluggish demand, especially in China and Germany, and with destocking in key countries. We assume that improving trends will begin to materialize in the second half."

Thomas added that muted growth momentum in the next quarters is also the result of fading effects from price inflation and a softer investment climate due to higher interest rates.

Earnings per share--before purchase price allocation accounting and excluding the effects of investments in Siemens Energy--are seen at between 10.40 and 11 euros ($11.28 and $11.93) in fiscal 2024.

In the fourth quarter ended Sept. 30, Siemens's net profit came to EUR1.72 billion, down from EUR2.70 billion in the year-earlier period. In fiscal 2023, net profit soared to EUR7.95 billion from EUR3.72 billion.

Quarterly revenue grew 4% to EUR21.39 billion, while orders came in broadly flat at EUR21.80 billion. On a comparable basis, revenue and orders increased 10% and 6% in the quarter, respectively.

"Our customers and distributors continued destocking their inventories in all key countries, particularly in China," Chief Executive Roland Busch said.

In the digital industries segment, orders declined 14% on year in the quarter, dragged by the short-cycle automation businesses, with market conditions softening across regions and continued destocking. The company assumes orders at its automation business bottomed out in the quarter.

Siemens said free cash flow exceeded EUR10 billion in the year, and that it will lift its dividend to EUR4.70 a share from EUR4.25 in 2022. That translates into a dividend yield of 3.5% based on the closing share price of EUR135.66 at the end of September.

The company also said it will start an upgraded share buyback program of up to EUR6 billion for up to five years as soon as it completes the current program.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

November 16, 2023 03:31 ET (08:31 GMT)

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