Siemens finds the software sector somewhat disappointing
In a recent financial report, Siemens announced its Q3 results for FY 2025, revealing a mixed performance across its industrial business. While the company achieved a consolidated net profit increase of 5% to €2.2 billion and a revenue growth of 5% to 19.4 billion euros, adjusted for currency and portfolio effects, the Digital Industries (DI) segment faced challenges [1][2].
The decline in the DI segment can be attributed to a tough year-over-year comparator. The previous year's quarter saw exceptionally strong software results in the DI segment, creating a high base for comparison. As a result, revenue in the DI software business declined compared to the prior year [1][2].
Moreover, currency translation effects negatively impacted growth, reducing order growth by about four percentage points and revenue growth by three percentage points [1]. Despite these challenges, the overall Industrial Business profit margin held at 14.9%, thanks to gains in other segments like Smart Infrastructure and Mobility [2].
The Mobility segment led the way with a 19% increase in revenue, while Digital Industries fell by a tenth. The decline in the DI segment is particularly noticeable in the software business, which saw a 30% drop in the third quarter, with revenue falling to 14.5% (i.p. 22.9%) [1].
However, Siemens still posted robust overall industrial business results. The Mobility segment more than tripled its order value to 7.9 billion euros, and demand in the automation business has continued to recover, with order intake increasing by 19% [1].
The company also reported strong order intake and increased revenue in the third quarter, primarily due to transportation technology. The result in the industrial business decreased by 7% to 2.8 billion euros, but Siemens remains on track to achieve a free cash flow of at least 10% of revenue for the sixth consecutive year [1][2].
Despite the challenges in the DI segment, the board reaffirmed its annual forecast. However, for Digital Industries, it is in the lower half of the targeted revenue and margin range [2]. The CFO reported that the free cash flow rose to €2.9 billion within the group [2].
In addition, Siemens plans to cut around 6,000 jobs, with 3,900 in Germany, due to restructuring costs of more than 200 million euros for the current final quarter [2]. Customers remain uncertain due to trade conflicts and tariffs, which impacted earnings per share by approximately 10 cents, totaling around €135 million [1].
In conclusion, while Siemens faced challenges in its Digital Industries segment in Q3 FY 2025, the company still posted strong overall industrial business results. The decline in the DI segment is specifically tied to high prior-year software results and currency effects [1][2].
[1] Siemens AG, Q3 FY 2025 Earnings Release, www.siemens.com/investor/en/home/financial-reporting/quarterly-reports/q3-fy-2025.html [2] Reuters, Siemens sees 200 mln euros in restructuring costs in Q4, 11 October 2025, www.reuters.com/business/siemens-sees-200-mln-euros-restructuring-costs-q4-2025-10-11/
The decline in the DI segment's revenue, particularly in the software business, can be attributed to a tough year-over-year comparator and currency translation effects. Siemens' overall Industrial Business, however, recorded robust results, with the Mobility segment leading the way, despite facing restructuring costs and uncertain customer behavior due to trade conflicts and tariffs.
