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Siemens Beats Q2 Forecast, Sees Limited Profit Hit From Tariffs

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Siemens reported stronger-than-expected second-quarter earnings on Thursday and said the global surge in tariffs will have only a limited impact on its full-year profit, thanks to its diversified global manufacturing base and flexible pricing strategy.

The German industrial giant, known for its factory automation systems, software, and rail technology, posted a 29% rise in industrial profit to €3.24 billion, well above analyst expectations of €2.75 billion.

Tariff Strategy and Global Footprint:

CEO Roland Busch stated that while trade barriers do pose challenges, Siemens is well-positioned to mitigate their impact. The company estimates the total tariff-related effect on 2024 profit will be in the high double-digit to low triple-digit million-euro range.

To minimize exposure, Siemens is:

  • Adjusting procurement strategies

  • Diversifying production

  • Increasing prices selectively (but cautiously)

“We’re going to act with a slow hand,” said CFO Ralf Thomas, indicating Siemens is not planning any immediate price hikes or shifts in manufacturing locations. The company operates 150 factories worldwide, including 28 in the U.S., 23 in China, and 12 in India, reducing its vulnerability to any one region’s trade policy.

Market Outlook:

Despite global economic uncertainty and customer caution — partly stemming from trade tensions between the U.S. and China, even as they declared a truce this week — Siemens reaffirmed its full-year sales growth forecast of 3% to 7% through September.

Siemens competes globally with peers like Schneider Electric and ABB, and remains a key barometer for global industrial demand. Its resilience to tariffs and strong quarterly performance reinforce investor confidence, even in a volatile trade environment.

ABB Confident in Data Center Growth Despite DeepSeek’s Energy-Efficient AI

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ABB CEO Morten Wierod expressed confidence in the continued growth of the data center market, despite concerns over the impact of DeepSeek’s low-energy AI models. Speaking on Thursday after ABB reported its fourth-quarter results, Wierod reassured investors that demand for the company’s electrification products remains strong.

DeepSeek, a Chinese AI startup offering a more energy-efficient alternative to U.S. rivals, caused a selloff in tech stocks earlier in the week after surpassing OpenAI’s ChatGPT in downloads on Apple’s App Store. The AI model’s ability to operate with significantly fewer chips raised fears that it could reduce demand for data center infrastructure, impacting suppliers like ABB. ABB’s stock dropped nearly 6% on Monday amid these concerns.

However, Wierod said discussions with major partners and customers indicated that capital expenditure plans for data centers remain unchanged. ABB has significantly benefited from data center expansion, with its orders in this sector growing by an average of 23% per year between 2019 and 2023. The pace accelerated in 2024, with data center-related revenue now contributing 15% to ABB’s electrification business, up from 12% in 2023 and 8% in 2022.

While Wierod declined to provide a forecast for 2025, he emphasized ABB’s strong positioning in the industry, particularly in China. He also highlighted the company’s role in improving data center energy efficiency, an increasingly important factor as AI computing demand surges. ABB’s motors and variable speed drives can reduce electricity consumption by up to 60%, while its uninterrupted power supply systems operate at 97.4% efficiency when converting electricity.

The company also expects to benefit from the $500 billion AI infrastructure investment announced last week by U.S. President Donald Trump, reinforcing the long-term demand for data center solutions.

“The need for data centers and AI will be very strong in the coming years,” Wierod said. “I have no doubt.”