Siemens, Europe's biggest engineering conglomerate, beat profit forecasts due to robust demand in fast-growing emerging economies and said signs for future sales were strong. Like most of its German peers, Siemens relies heavily on exports of manufactured goods to China, Brazil, India and Russia to power growth, profiting from aggressive infrastructure investment in those countries.
Siemens and steelmaker ThyssenKrupp have also benefited from emerging economies' appetite for German luxury cars, high-end engineering machinery and industrial equipment. Latest data showed German manufacturing orders grew at their fastest rate in 10 months in November, quicker than economists expected mainly due to strong demand from outside the euro zone for durable goods.
Siemens said growth was driven by its bread-and-butter Industry Sector, which makes equipment that large companies use to run factories, automation gear to help industrial plants run smoothly and LED lightbulbs to cut luxury cars' energy bills. Businesses whose products take longer than four months to make, or long-cycle ones such as railway locomotives and power plants, also played catch-up in matching the short-cycle recovery in lightbulbs and automation drives. "Orders and revenue grew in all regions, particularly in emerging markets," Siemens Chief Executive Peter Loescher said on Tuesday, referring to the first quarter to end-December.
"The sharp rise of first quarter orders from the previous year gave us a book-to-bill ratio of 1.16." A ratio above 1 means growing demand. Loescher said the ratio was more than 1 in all sectors and regions, "with particular strength from the emerging markets, such as India and China".