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The tech world is having a rough time with slowing sales, layoffs, and funding declines, but Siemens seems to be having a comparatively smooth ride with its digitization-focused businesses.
The industrial conglomerate released its fiscal year (FY) Q1 2023 earnings report this month, where it posted an all-time record profit for its Industrial Business segment in the first quarter, with €2.7 billion ($2.9 billion) in profit. Total company revenue climbed 10% year over year to €18.1 billion ($19.3 billion), up from €16.5 billion ($17.6 billion).
Siemens’ FY Q1 performance wasn’t just a bright-spot blip—it represents a continuation of the company’s strong fiscal 2022. In FY 2022, it also posted a record-high profit of over €10 billion ($10.7 billion) in its Industrial Business section, which includes its Digital Industries, Mobility, and Smart Infrastructure divisions. The digital transformation-focused conglomerate offers a range of tech-focused products and services to customers, serving industries from transportation to healthcare.
“Our world-class supply-chain teams continue to make a clear difference in a competitive environment, building on long-term trustful relationships with our suppliers and partners,” Roland Busch, president and CEO of Siemens AG, said on the company’s most recent earnings call. “This close collaboration currently matters most in industrial electronics, where supply is still tight.”
Siemens’s strong performance comes amid a broader tech downturn that has hit consumer electronics manufacturers and ad-based platforms particularly hard.
In its Digital Industries business, which helps companies integrate technologies like AI, edge computing, and industrial 5G into their business, revenue climbed from €4.3 billion ($4.7 billion) in FY Q1 2022 to €5.1 billion ($5.4 billion) in FY Q1 2023, an increase of 18%. The company attributed the increases to its automation business, while other key subsegments like software declined due to “higher expenses related to cloud-based activities, including the transition to software as a service.”
“In Digital Industries, we saw continued robust demand at high levels across our core end markets, leading to sequential order growth,” Ralf Thomas, chief financial officer of Siemens AG, said on the earnings call. “Investment sentiment continues to be healthy, not only in discrete industries, including automotive, machine building, and aerospace, but also in hybrid verticals such as food and beverage or pharma.”
Siemens’ Smart Infrastructure business, which specializes in tech like intelligent grid control, electrification, and building automation, posted its best quarter ever too, increasing revenue 20% from the same time last year to €4.6 billion ($4.9 billion) from €3.8 billion ($4 billion).
Within Smart Infrastructure, electrification and electrical products led growth in the business. Orders increased 16% in the electrification business on the back of new contracts in the semiconductor industry, while revenue increases stemmed from electrical products and electrification for data centers.
The company anticipates its success will continue this fiscal year, despite the headwinds facing the tech world: On the earnings call, Siemens raised its guidance for 2023, projecting single-digit percentage increases in revenue, particularly for its Digital Industries, Mobility, and Smart Infrastructure businesses.