Siemens buoyed by industrial results to beat earnings expectations
The German industrial manufacturing company Siemens has released its earnings for the second quarter of 2019, beating analysts predictions.
The industrial side of the business performed particularly well. Siemens said in its press release that earnings “for Industrial Business climbed 7% to €2.4bn, with most businesses increasing their performance.” As the Financial Times reports, this figure eclipses analysts’ estimates of €2.24bn (US$2.51bn).
While net income fell 5% to €1.9bn ($2.13bn) the company said that this was “near the prior-year level which benefited substantially from a €0.7bn Adjusted EBITA from Centrally managed portfolio activities.”
Other results contained within the report include the fact that, across the company, orders were up by 6%, totaling €23.6bn ($26.42bn), while revenue rose 4%, to €20.9bn ($23.4bn). Furthermore, Siemens revealed that “excluding currency translation and portfolio effects, orders increased 4% and revenue was up 2% compared to Q2 FY 2018.”
Joe Kaeser, the President and Chief Executive Officer of Siemens, was confident in the future health of the company amidst these results, saying: "We delivered on our promises again this quarter, and even exceeded expectations in many areas. Now, we enter into a new era to become an even stronger and more focused Siemens."
The new era to which Kaeser refers comes with a renewed focus on what the company calls “Smart Infrastructure” as well as “Digital Industries”. The former involves the building part of the business and “intelligently connects energy systems, buildings and industries to adapt and evolve the way we live and work.” The latter is based around digital transformation, and describes itself as “pav[ing] the way for still more innovation, new services and even entirely new, data-based business models.”
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.