By Nina Kienle

Siemens posted a first-quarter net profit increase that beat market expectations as it continues to benefit from data-center demand.

The German industrial conglomerate has been among the early winners in a data-center boom driven by artificial intelligence, which powered growth in orders, revenue and profit at Siemens's key smart infrastructure segment. The division makes electrical and grid equipment that are in high demand amid a rush to build more infrastructure to support the AI era.

Industrial companies that have reported so far this earnings season said they continue to experience strong demand from data centers amid a surge in construction activity. European peer ABB beat market views for the fourth quarter, when its electrification business continued to benefit from data-center demand. In the U.S., Eaton posted record fourth-quarter results with strong orders and backlog growth. French Schneider Electric is expected to post full-year results on Feb. 20.

Orders, revenue and profit rose in the smart infrastructure segment, with the highest growth contribution coming from the electrification business, which won a number of large contracts from data center, energy and industry customers, Siemens said.

Orders in the division rose 5% on a comparable basis, with revenue rising 10% to 5.29 billion euros ($5.49 billion). Profit rose to 891 million euros from 885 million euros in the same period the prior year.

"Some people wonder if AI isn't just a lot of hype," Chief Executive Roland Busch said. "But I can state very clearly: in our world - in our automation, mobility, infrastructure and healthcare businesses - that is definitely not the case."

Orders in the digital industries rose by 6% on a comparable basis, signalling the start of an expected recovery, Busch said. However, profit fell 34% to 588 million euros. Revenue fell 11% to 4.05 billion euros on the automation business, where revenue remained low due to continued destocking, CEO Busch said. The decline was partially offset by a 15% increase at the software business, he said. Busch expects stock levels in the segment to largely return to normal by the end of the second quarter of the fiscal year.

Siemens said that for the quarter ended December, net profit increased to 3.71 billion euros from 2.39 billion euros for the same period the prior year. Analysts had forecast net profit at 3.35 billion euros, according to consensus estimates provided by Visible Alpha.

Revenue rose to 18.35 billion euros from 17.75 billion euros. Orders amounted to 20.07 billion euros, down from 21.64 billion euros.

Analysts saw revenue and order intake at 18.02 billion euros and 19.18 billion euros, respectively, according to consensus estimates provided by the company.

Profit from industrial business fell 8% to 2.52 billion euros, with a margin decrease to 14.1%. The figure beat analysts' expectation of 2.44 billion euros, according to the company compiled consensus.

Higher order intake in most industrial businesses was more than offset by a decrease in the mobility business, which reported a sharply lower volume from large orders, Siemens said.

"With a promising start to fiscal 2025, we are creating clear momentum for continued value creation for our stakeholders," Chief Financial Officer Ralf Thomas said. "We see strong traction in bringing real world impact with our leadership in industrial AI," he said.

For fiscal 2025, the company backed its outlook, continuing to anticipate moderate macroeconomic growth. The group expects comparable revenue growth in the range of 3% to 7%, with infrastructure markets -- particularly electrification and mobility -- expected to remain strong, it said. Smart infrastructure is expected to see a profit margin of 17% to 18%. Digital industries is anticipated to see a profit margin of between 15% and 19%, it said.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

February 13, 2025 02:53 ET (07:53 GMT)

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