Thursday, November 14, 2024

Siemens Shares Hit Record as Data Center Boom Drives Orders

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(Bloomberg) — Siemens AG’s shares rose to a record after the company said the boom in power hungry data centers will drive demand for its transformers and grid technology in the coming year.

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Comparable revenue is expected to rise as much as 7% this fiscal year, after rising 3% in the 12 months through the end of September, Siemens said Thursday. Siemens raised its dividend 11% to €5.20 ($5.48) per share.

Siemens has seen orders for its electrification products jump as the surge in artificial intelligence investments gave rise to more data centers with massive energy requirements. The growth has helped offset weaker results for its factory-automation business, which has seen orders drop amid an ongoing slump in China. Siemens net income reached a record €9 billion in fiscal 2024.

“The continuing boom in digitalization and artificial intelligence, the growing demand for higher resilience and the steps toward an all-electric and decarbonized world offer tremendous opportunities for all our offerings,” Siemens Chief Executive Officer Roland Busch said in a speech.

The company’s shares rose as much as 7.5% in early trading, the biggest intraday jump since February 2023, helping push the stock up about 40% in the past 12 months.

Siemens and other industrial companies have seen sales of factory-automation equipment suffer from a prolonged downturn in China and are banking on fresh government efforts including tax cuts to revive the economy. Swiss rival ABB Ltd. last month reported a decline in factory-automation orders in China.

Revenues in Siemens’ key digital industries unit, which makes machines and systems to automate manufacturing, fell 10% in the fiscal year through September. Chief Financial Officer Ralf Thomas said Thursday that the unit will likely start to recover in the second half of fiscal 2025.

Busch, speaking Thursday in a Bloomberg TV interview, said the company is well positioned to take advantage of China’s plan to invest in high-tech manufacturing. He added that private consumption has yet to pick up despite Beijing’s stimulus efforts.

“We have a very strong position in China,” Busch said. “It is of utmost importance for us that the Chinese market is picking up.”

Busch is pivoting the German industrial manufacturer to higher-margin, software-driven product lines to improve profitability. In October, Siemens announced it would buy software maker Altair Engineering Inc. for an enterprise value of $10 billion, its largest-ever acquisition that is expected to close in the second half of 2025. Siemens plans further investment and acquisitions, Busch said.

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