Siemens: Particularly positive operating performance and growth in the second quarter of fiscal year 2022

In the second quarter of 2022 (January – March), Siemens continued its growth and achieved strong operating performance, as stated in its announcement.

“The increase in orders and revenue once again reflects our customers’ confidence in our support for digitization, automation and sustainability. In an extremely demanding environment, our business continues to thrive,” the company said in a statement. be strong, “said Roland Busch, President and CEO of Siemens AG. “We are participating in the international community condemning the war in Ukraine and focusing on supporting our people as well as providing humanitarian assistance. Today, we announced our decision to carry out a transitional process to end our industrial business in Russia.”

With strong operating results and exceptional free cash flows of € 1.3 billion, Siemens’s second quarter underscores our executive capabilities and strength, even in the face of significant adverse conditions. The tangible results of our portfolio optimization and the continuous addressing of the challenges of the supply chain allow us to look with confidence at the second half of our financial year. Therefore, we confirm our estimates, “said Ralf P. Thomas, Chief Financial Officer of Siemens AG.

• Orders for the second quarter increased by 32% on a 12-month basis, to € 21 billion, due to double-digit growth in all Industrial Activities, while revenues increased by 16% on a 12-month basis, to € 17 billion. sales trend was 1.23.

• Orders increased by 22%, while revenues increased by 7% on a comparable basis, excluding exchange rate differences and portfolio results, mainly the acquisition of Varian Medical Systems, Inc. between the periods in question.

• Profits for Industrial Activities fell to € 1.8 billion with a profit margin of 11.0%. Both were heavily burdened by € 0.6 billion in impact, mainly on Mobility, following sanctions imposed on Russia.

• Net income was € 1.2 billion with core earnings per share (EPS) amounting to € 1.29. Basic earnings per share before market price sharing (EPS pre PPA) were € 1.50, while net income for the current period included Russia-related effects totaling € 0.6 billion in the previous quarter. benefited from a transfer profit of € 0.9 billion as part of discontinued operations.

• Free cash flow from continuing and discontinued operations rose to € 1.3 billion for the quarter (1.2 billion in the second quarter of fiscal year 2021).

Second quarter of the financial year 2022

• Increased growth opportunities in many key markets for Siemens despite the continuing complex macroeconomic environment affected by the war in Ukraine, the economic sanctions imposed on Russia, and the coronavirus pandemic (COVID-19). Continuous avoidance of major disruptions from increased supply chain risks related to electronic components, raw materials and logistics.

• The very high ordering continued, recording a double-digit increase in all Industrial Activities.

• Significant revenue growth for Siemens Healthineers, Digital Industries and Smart Infrastructure. Mobility revenue was affected by the decline in revenue following sanctions imposed on Russia.

• The exchange rate differences added four percentage points each to the increase in orders and revenue. The portfolio results, mainly related to the acquisition of Varian Medical Systems Inc. (Varian) in the third quarter of fiscal year 2021, added six percentage points to ordering and five percentage points to revenue growth.

• Industrial Earnings: significant increase in Siemens Healthineers, including continued strong sales of rapid covid test and improvements in Digital Industries and Smart Infrastructure. Overall reduction due to significant damage to Mobility due to impairments and other charges totaling € 0.6 billion following sanctions imposed on Russia. Digital Industries and Smart Infrastructure had little impact on Russia.

• Earnings in holding companies, mainly due to the revaluation profit of € 0.3 billion related to the announced sale of the Siemens share in Valeo Siemens eAutomotive GmbH. Losses under the Consolidated Financial Statements were higher by € 0.3 billion.

• Net income was affected by € 0.6 billion from impairments and other charges, mainly recorded in Mobility, following the sanctions imposed on Russia. The second quarter of 2021 saw a profit of € 0.9 billion from the sale of Flender GmbH as part of its discontinued operations.

• Industrial Activities generated strong free cash flows of € 1.9 billion with a cash conversion cycle of 1.07 – slightly higher than in the second quarter of 2021, where free cash flows were even higher at € 2.1 billion. Free Cash Flows flows for the Siemens Group were € 1.3 billion, over the second quarter of 2021, which included higher taxes. The aforementioned effects related to Russia had no effect on free cash flows in the second quarter of 2022.

• Employment ROCE decreased mainly due to the decrease in net income.

Estimates

We reaffirm our financial targets for fiscal year 2022 for the Siemens Group, which are based on the continued growth of global GDP and our expectation that the challenges for our businesses from COVID-19 and supply chain constraints will be mitigated during during the financial year 2022. Under these conditions we expect from our industrial activities to continue their profitable growth.

For the Siemens group we expect a 6% to 8% comparable increase in revenue, excluding exchange rate differences and portfolio results and a sales trend index above 1.

Digital Industries expects for the fiscal year 2022 to achieve a comparable increase in revenue from 9% to 12% (previously from 5% to 8%) and a profit margin of 19% to 21%, including adverse conditions, up to two percentage points related to the strategic transition to software as a service (SaaS) in parts of its software companies, including the expected decrease of up to two percentage points from the rapid increase in the strategy transition to software as a service (SaaS) in parts of its software companies.

The Smart Infrastructure sector expects for the fiscal year 2022 a comparable increase in revenue from 6% to 9% (previously from 5% to 8%) and a profit margin of 12% to 13%.

Mobility, which previously expected a comparable revenue increase for the financial year 2022 by 5% to 8%, expects revenue at the level of the previous year. The profit margin is expected to be 10.0% to 10.5%, with the expected profit from the sale of Yunex Traffic being enough to offset the effects of the sanctions imposed on Russia.

It is expected that this profitable growth of industrial activities will lead to an increase in core EPS from net income before the distribution of market prices in the range of € 8.70 to € 9.10, from € 8.32 in the financial year 2021 Net income for the year 2021 included a positive contribution from divestitures and other gains related to the portfolio totaling € 1.5 billion.

A similar positive contribution to fiscal year 2022 is expected from portfolio-related results, with no Russia-related charges. Portfolio related results include Yunex Traffic sales, Siemens Logistics parcel business and our Valeo Siemens eAutomotive stake.

“The assessments exclude charges from legal and regulatory issues”, the company concludes.