Siemens said on Thursday that robust industrial demand remained in the third quarter, despite expenditures tied to its Siemens Energy investment and decision to exit Russia pushing the engineering firm into the red for the first time in nearly 12 years.

The manufacturer of industrial software and trains reported increasing revenue and orders for the three months ending in June, a good sign for the overall health of the industrial sector.

Siemens claimed that orders in industrial automation were 20 per cent higher than a year ago, with increasing component and shipping costs being addressed by passing the expenses on to consumers.

Despite sanctions against Russia, soaring inflation, and the continued effects of the pandemic, CEO Roland Busch said demand was still strong.

“We captured significant opportunities in a market environment with ongoing high demand,” he said in a statement. “Our strong top line momentum continued, with a comparable order growth of 20% since the beginning of fiscal 2022.”

Siemens, whose products are used to outfit factories, buildings, and transportation networks, is viewed as a symbol for the greater industrial economy.

According to the findings of other businesses in the sector, such as ABB and Schneider Electric, demand in the European capital goods sector is holding up.

Automotive, machine building, and electronics end-markets had “continuing underlying growth momentum with signs of a certain stabilisation,” according to Siemens Chief Financial Officer Ralf Thomas.

“For the future, we expect a sequential normalization of demand for the fourth quarter and a gradual reduction of order backlog in fiscal 2023,” Thomas said, adding it would be unrealistic to expect orders growth to remain above 30% over the longer term.

In the third quarter, orders increased by 7% to 22.07 billion euros ($22.8 billion), while profit at its industrial division increased by 27% to 2.88 billion euros.

However, it reported a 1.66 billion euro net loss to shareholders after taking a 2.7 billion euro non-cash charge to write down the value of its interest in Siemens Energy.

Siemens’ decision to leave Russia in the aftermath of the Ukraine war also cost the company 558 million euros in net profit. Its shares fell 1.2% in early trade after the company reduced its full-year earnings per share guidance to 5.33 to 5.73 euros per share, down from 8.70 to 9.10 euros before.

Despite the fact that these losses were somewhat offset by 739 million euros from the sale of its Yunex Traffic, the charges resulted in a net loss of 1.66 billion euros for Siemens.

(Adapted from RTE.ie)