Siemens flags supply bottlenecks after raising guidance

ZURICH (Reuters) -Siemens increased its full year profit and sales outlook for the second time this year on Friday but warned about tightening supply chains as the post-pandemic recovery accelerates.

Slideshow ( 3 images )

The German industrial group became the latest company to report a strengthening upturn, saying it was seeing strong momentum in the automotive and machine building sectors and for industrial software.

Industrial output in China was now above pre-pandemic levels, while the recovery in Europe and the United States was “progressing at a faster pace,” Chief Executive Roland Busch said.

In China the trains to factory automation maker reported a 44% increase in revenue during its second quarter. The recovery was broad-based Busch said, with sales in Germany also rising 7%.

“The industrial recovery has continued and was clearly visible in ...automotive, machine building, electronics, chemicals and pharma,” Busch told reporters.

But Busch, presenting his first results after taking over as CEO from Joe Kaeser earlier this year, said Siemens was also seeing “tensions” in its supply chain.

Siemens was seeing shortages in steel, plastics and freight capacity, while it was working hard to reduce risks from electronics bottlenecks.

A pandemic-led surge of consumer electronics sales, stockpiling in China and supply problems have caused a global shortage in semiconductor chips that has squeezed capacity and driven up costs of even the cheapest components.

“As a result, in individual cases, we may face production constraints and prolonged delivery lead times to customers in the months ahead,” Busch said.

Like other industrial companies such as Switzerland’s ABB and France’s Schneider Electric Siemens has been seeing increasing orders as customers ramp up their production and rebuild their inventories.

The upturn helped Siemens beat forecasts for revenue, orders, and industrial profit during the three months to the end of March, and raise its full year guidance.

Siemens now expects comparable revenue to rise by 9 to 11% for the full year, up from the previous view of mid to high single digit growth.

Full year net profit meanwhile is now expected to be in the range of 5.7 billion to 6.2 billion euros range, above the previous expectation of net income of 5.0 to 5.5 billion euros.

During its second quarter, Siemens reported industrial operating profit of 2.09 billion euros ($2.52 billion), slightly ahead of the 2.015 billion euros forecast by analysts in a company gathered consensus.

Group revenue rose 8% to 14.67 billion euros, beating forecasts for 14.13 billion euros. Net profit rose to 2.39 billion euros, boosted by a 900 million euro gain from the sale of the mechanical and electrical drive systems business Flender.

($1 = 0.8288 euros)

Reporting by John Revill, editing by Emma Thomasson and Keith Weir