Siemens has today reported first-quarter profit slightly ahead of expectations despite the German engineering group seeing a slowdown at its flagship factory automation unit.
Digital Industries, which supplies companies with software and controllers to operate their production lines, saw new orders fall by a third as market conditions weakened.
Customers who built up stocks of components to avoid shortages last year also held off buying new equipment and decided to run down their stocks, Siemens said.
The downturn was seen most strongly in Asia and Australia, due particularly to weakening demand from China, it added.
Although the situation in China was improving from the previous quarter, Siemens said it expected conditions to remain tough in its third biggest market after the US and Germany.
"We anticipate regional differences in the way customers ultimately reduce their inventories to normal levels," chief executive Roland Busch told reporters.
"Depending on the speed and scale of its economic recovery, China might take somewhat longer," the CEO added.
A stronger performance from its train-making Mobility business helped offset the downturn, while Siemens's building automation arm Smart Infrastructure had its best-ever quarter.
Like other industrial companies Siemens's results are seen as a proxy for the broader global economy.
Busch said the Red Sea shipping crisis was having "practically no impact" on Siemens, due to its local supply chains and experience in handling such problems.
Overall, Siemens reported a rise in industrial profit of 3% to €2.72 billion for the three months to the end of December, beating forecasts of €2.64 billion in a company-gathered consensus of analysts.
Revenue rose 2% to €18.41 billion, below the €18.58 billion forecast after currency translation effects - mainly from a stronger dollar - reduced sales reported in euros.
Siemens confirmed its full year outlook, saying it still expected revenue growth of 4% to 8%, after divestments and when currency effects are removed.
Busch pointed to an order backlog, which now stood at €113 billion, as giving him confidence for the future.
Meanwhile, Siemens CEO Roland Busch today criticised the rise of extremism in Germany, the latest business leader to voice concerns about sharpening political divisions in the country.
"I'd like to state loud and clear: extremism of any kind hurts this country," Busch said in a speech to shareholders at Siemens's annual general meeting in Munich.
"Prosperity is based on progress and innovation, on exchanges and openness, on diversity and dependability - and above all on creative and committed people," he added.
"And this naturally includes all those who come to Germany and want to contribute themselves and their skills."
Although Busch did not explicitly mention Alternative for Germany (AfD) his comments could be seen as an attack on the far-right party, which is currently in second place in opinion polls behind the main opposition conservatives.
German companies and their CEOs are increasingly warning about the threat of right-wing extremism to Europe's largest economy following a report about a meeting where plans for mass deportations of citizens of foreign origin were discussed.
Siemens Energy supervisory board chairman Joe Kaeser lastmonth warned of a resurgence of right-wing extremism in Germany, saying a policy of mass deportation was "absolutely disgusting".
The AfD has sought to distance itself from the deportation proposal aired at a meeting with right-wing radicals, saying it is not party policy. AfD deputy leader Peter Boehringer told Reuters last week accusations that the party harmed the economy were part of a "state and media campaign against the AfD".
But the report has sparked national outrage and concerns over Germany's attractiveness to foreign labour and investment.
Siemens currently employs around 88,000 people in Germany, its second biggest market after the US, and is investing $1 billion in a new high tech production and research centre in Erlangen, near Nuremberg.
