Investing.com -- Siemens (ETR:SIEGn) reported a first-quarter net profit that exceeded market expectations, driven by strong demand from data centers. The company’s shares jumped more than 5% in European trading.
The smart infrastructure segment saw growth across orders, revenue, and profit, with the electrification business contributing the most. Siemens highlighted several large contracts secured from data center, energy, and industrial clients.
Orders in the segment increased 5% on a comparable basis, while revenue rose 10% to 5.29 billion euros ($5.49 billion). Profit grew slightly to 891 million euros from 885 million euros a year earlier.
“Some people wonder if AI isn’t just a lot of hype,” said Siemens CEO Roland Busch. “But I can state very clearly: in our world – in our automation, mobility, infrastructure and healthcare businesses – that is definitely not the case.”
The digital industries division showed early signs of recovery, with orders up 6% on a comparable basis, Busch noted. However, profit in the segment declined 34% to 588 million euros, while revenue dropped 11% to 4.05 billion euros due to ongoing destocking in the automation business.
This decline was partly offset by a 15% revenue increase in Siemens’ software business. Busch expects inventory levels in the automation segment to normalize by the end of the fiscal second quarter.
For the quarter ended in December, Siemens’ net profit rose to 3.71 billion euros from 2.39 billion euros a year earlier, surpassing analysts’ consensus estimate of 3.35 billion euros provided by Visible Alpha.
Revenue climbed to 18.35 billion euros from 17.75 billion euros, while orders slipped to 20.07 billion euros from 21.64 billion euros. Analysts had projected revenue at 18.02 billion euros and orders at 19.18 billion euros, according to company-compiled estimates.
Profit from the industrial business dropped 8% to 2.52 billion euros, with the margin narrowing to 14.1%, though this figure still beat analysts’ expectations of 2.44 billion euros.
Siemens reaffirmed its full-year (FY) 2025 outlook, expecting moderate macroeconomic growth. The company forecasts comparable revenue growth between 3% and 7%, with electrification and mobility markets remaining robust.
Smart infrastructure is projected to achieve a profit margin of 17% to 18%, while digital industries is expected to see margins between 15% and 19%.
"Q1 ahead with FY guide reiterated is a supportive start to 2025," RBC (TSX:RY) Capital Markets analysts commented. "We expect no major changes to FY consensus, but it will increase confidence," they added.