Siemens slides more than 5% as profit falls, automation unit slows | Wilnesh News

Shares of German technology giant Siemens fell more than 5% on Thursday after the company reported a drop in fiscal second-quarter profit and said its automation unit was slowing.

The company’s industrial profit was 2.51 billion euros ($2.73 billion) in the three months to March, down 2% from the same period last year. The figure was also lower than the 2.68 billion euros forecast by company analysts reported by Reuters.

In the three months to the end of March, net profit fell to 2.2 billion euros, a 38% annual decrease, and sales fell 1% to 19.16 billion euros.

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

Siemens focuses on automation and digitalization and provides technology for a range of sectors, including transportation and healthcare.

The company said its automation unit, which is part of its digital industrial business, has declined sharply.

“We saw a decline of -20%. However, you have to see that the Chinese market is still weak against the backdrop of the record highs in the last quarter, so overall there is no structural reason for this,” Siemens CEO Roland Roland Busch told CNBC’s Annette Weisbach on Thursday.

Bush said the quarter was generally “solid.” “Demand for our products is strong and our growth drives digitalization and sustainability, which remain intact.”

Busch said demand for automation has “increased significantly” in recent years, causing inventory levels to rise. Reducing inventories now will take some time and create a “destocking effect,” he said.

“It’s going to take longer because demand isn’t as high and we’re reducing inventory,” Bush added.

He said the decline in Chinese demand was due to weak private consumption, a lack of acceleration in exports and a decline in Chinese direct investment, but there was “no doubt” that China would eventually come back.