Siemens cautions about tougher 2020 after beating Q4 forecasts

Credit: REUTERS/Arnd Wiegmann

Siemens expects a weakening in the global economy over the next 12 months, the German industrial company said on Thursday, after beating forecasts during its fourth quarter.

By John Revill

Munich, GERMANY, Nov 7 (Reuters) - Siemens SIEGn.DE expects a weakening in the global economy over the next 12 months, the German industrial company said on Thursday, after beating forecasts during its fourth quarter.

The trains to turbines maker said it expected the macroeconomic environment to remain "subdued" next year, citing geopolitical and economic risks.

The problems would particularly hit demand for its short-cycle products, used by the automotive and machinery industries, where the company expects a "moderate decline" in the market.

"The weakening of the global economy accelerated clearly during fiscal 2019," Chief Executive Joe Kaeser said in a statement, adding that Siemens nonetheless achieved its fiscal guidance.

Siemens's industrial operating profit rose by 20% to 2.64 billion euros ($2.92 billion)in the three months to the end of September, beating analyst expectations for 2.33 billion euros.

During the fourth quarter Siemens increased orders 4% to 24.71 billion euros, and revenue by 8% to 24.52 billion euros - both figures beating analyst forecasts.

The company achieved an operating profit margin - excluding severance charges - of 11.5% during the year, within its target range of 11 -12%.

During the quarter, the company's figures were boosted by revenue growth at its smart infrastructure business, which makes products to automate buildings and Siemens Healthineers SHLG.DE, the medical equipment maker where Siemens retains an 85% stake.

But Siemens's flagship Digital Industries business slowed, with growth for industrial software offset by weaker demand for factory automation and motion controllers.

Orders in the business fell by 2% during the quarter, with an increase in the Americas offset by downturns in Asia and Europe.

Siemens has not been the only industrial company feeling the chill of the global economic slowdown which is hitting the automotive industry in particular, a situation worsened by the repercussions of U.S.-Chinese trade war.

Siemens's Swiss rival ABB ABBN.S last month called out weakening conditions in the United States and China, while GE GE.N posted a third quarter loss as it continued its efforts to reboot its business.

($1 = 0.9042 euros)

(Reporting by John Revill Editing by Michelle Martin)

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