Siemens stock takes off on guidance upgrade, earnings beat

FILE PHOTO: Siemens virtual annual shareholder meeting in Munich

By John Revill

ZURICH (Reuters) - Siemens shares surged on Thursday after the engineering company upped its full year sales and profit guidance and said it had made a "flying start" to its new business year.

The trains-to-industrial-software group's stock was 7.1% higher in early trading, hitting its highest level since January 2022 and making it the second biggest gainer in the Stoxx Europe 600 Industrial Goods & Services Index.

Siemens reported better-than-expected quarterly profit at its industrial business late on Wednesday and raised its full-year sales and profit guidance.

Pre-announcing the results, which had been due on Thursday, Siemens said it also now expected full-year revenue growth of 7% to 10%, up from its previous forecast for 6% to 9%.

Supply chain bottlenecks are easing, Chief Executive Roland Busch told reporters on Thursday, and the company's "clear goal" was to shorten delivery times.

Siemens was also working through a record 102 billion euro ($110 billion) order backlog that will generate around 40 billion euros in revenue in the next three quarters, the company said. Siemens' business year starts in October.

"After our flying start to fiscal 2023, we will further leverage our exceptional order backlog and execution strength. This gives a high confidence level despite a volatile environment," Busch said.

"I'm confident that we'll reach our growth targets."

Busch said many countries had launched investment programmes in areas such as semiconductors, or to combat climate change with green technologies.

Chief Financial Officer Ralf Thomas said the investment mood within industry also looked healthy, not only in traditional manufacturing but also areas like food and beverage and pharmaceuticals production.

Siemens was stocking up on its own inventories to maintain supplies and had been able to offset higher wages and raw material costs with productivity gains and price increases, Thomas said.

"This is a stellar start to the year," said JP Morgan analyst Andrew Wilson, who said he expected the stock to perform strongly.

($1 = 0.9291 euros)

(Reporting by John Revill; editing by John Stonestreet)