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Press Release16 May 2024Siemens AGMunich
Solid second-quarter performance – Outlook confirmed
“We continued to benefit from strong demand for digitalization and sustainability during our second quarter, particularly in the data center and semiconductor industries. Siemens proved its resilience with strong revenue performance in Smart Infrastructure, Mobility and industrial software; this nearly offset currently muted demand in Digital Industries’ automation business. With the right strategy, the right technologies and the right team, we are well positioned for profitable growth,” said Roland Busch, President and CEO of Siemens AG.
“With Innomotics, we have taken another significant step in optimizing our portfolio. Based on our solid performance in the first half of the fiscal year, a very strong balance sheet recognized by our latest rating upgrade, and our record order backlog, we look to the future with confidence as a leading technology company. We confirm our outlook for fiscal 2024,” said Ralf P. Thomas, Chief Financial Officer of Siemens AG.
Order backlog again at record level
At €19.2 billion in Q2 2024, revenue on a comparable basis – that is, excluding currency translation and portfolio effects – was nearly unchanged compared to the prior-year period (Q2 2023: €19.4 billion). Orders declined 12 percent on a comparable basis to €20.5 billion (Q2 2023: €23.6 billion). This decline was primarily due to the sharply higher volume generated by major orders at Mobility in Q2 2023. The book-to-bill ratio reached a strong level of 1.07. With an order backlog of €114 billion, Siemens again set a record and continued to advance on its growth path.
At €2.5 billion, Profit Industrial Business
was close to the prior-year level (Q2 2023: €2.6 billion). The profit
margin was 14.0 percent (Q2 2023: 14.2 percent).
Net income declined to €2.2 billion from €3.6 billion in Q2 2023, in which net income had benefited from a tax-free
gain of €1.6 billion due to the reversal of an
impairment of Siemens’ stake in Siemens Energy AG. Corresponding basic earnings per share before purchase
price allocation accounting (EPS pre PPA) were €2.73 compared to €4.57 in Q2 2023,
in which €2.01 of the EPS pre PPA had been due to the impairment reversal.
Free cash
flow all-in at Group level from continuing and discontinued operations reached
€1.3 billion (Q2
2023: €2.3 billion). The decline in free cash flow was
mainly due to the Industrial Business, which generated free cash flow of €2.1 billion compared to €2.7 billion in Q2 2023.
Clear revenue growth at Smart Infrastructure and Mobility
In a
challenging market environment, order intake at
Digital Industries declined
12 percent on a comparable basis to €4.3 billion, primarily due to ongoing elevated stock levels at customers and
distributors, particularly in China. Orders in the software business, on the
other hand, increased significantly mainly due to the electronic design
automation (EDA) software business in the U.S. Revenue declined 11 percent on a comparable basis to €4.5 billion, whereby higher revenue in the software business – primarily in
the EDA area – was more than offset by declines in the automation businesses,
particularly for higher-margin products. Profit declined 41 percent to €741 million, while the profit margin was
16.5 percent. Profit and profitability
declined mainly due to reduced capacity utilization on lower revenue and a less
favorable product mix in the automation businesses.
At Smart
Infrastructure, orders increased 10 percent on a comparable basis to €6.1 billion on contributions to
growth from all businesses. It was the first time that Smart Infrastructure had
exceeded €6 billion in a single quarter, setting
a quarterly record for order intake. On a geographic basis, growth was led by
the U.S., where the electrical products and electrification businesses recorded
numerous contract wins from data center operators. All businesses also
contributed to an increase in revenue, which rose a total of 6 percent on a comparable basis to €5.1 billion, with the strongest growth
coming from the electrification business, which executed strongly on its large
order backlog. On a regional basis, the highest growth contribution came from
the U.S. Profit increased 10 percent to €854 million. The profit margin reached 16.6 percent compared to 15.9 percent in Q2 2023.
Mobility recorded a clear increase in
revenue, which rose 6 percent on a comparable basis to €2.8 billion, with growth at all businesses. Orders, on the other hand, declined
49 percent on a comparable basis to
€3.2 billion. Order intake included a
€0.4 billion contract for light rail
systems in the U.S. and several major orders for locomotives in Europe. Q2 2023
had included a sharply higher volume of major orders, including a €2.9 billion order for locomotives and related maintenance in India. Profit
and profitability in Q2 2024 were up at nearly all
businesses due to higher revenue and strong project execution. Profit totaled €237 million. The profit margin was 8.4 percent compared to 9.2 percent in Q2 2023, in which profit and
profitability had benefited from trailing effects related to Russia.
Outlook at Group level confirmed
Siemens
confirms its outlook for the Siemens Group for fiscal 2024. The company continues
to assume that geopolitical tensions do not further increase. Under this
condition, Siemens expects its Industrial Business overall to continue its
profitable growth.
For
the Siemens Group, Siemens continues to expect comparable revenue growth, net
of currency translation and portfolio effects, in the range of 4 percent to
8 percent and a book-to-bill ratio above 1.
Contrary
to previous assumption, destocking by customers of Digital Industries’
automation businesses is likely to continue well into the second half of the calendar
year, especially in China. For the second half of fiscal 2024, Digital
Industries assumes that demand in its automation businesses will pick up
compared to the first half of the fiscal year and expects large contract wins
in its software business. As a result, Digital Industries now expects
comparable revenue for fiscal 2024 to come in minus 8 percent to minus
4 percent below the prior year (previously expected at 0 percent to
plus 3 percent) and the profit margin is now expected to be 18 percent
to 21 percent (previously expected in a range of 20 percent to 23 percent).
Smart Infrastructure now
expects for fiscal 2024 comparable revenue growth of 8 percent to 10 percent
(previously expected at 7 percent to 10 percent) and a profit margin
of 16 percent to 17 percent (previously expected in a range of 15 percent
to 17 percent).
Mobility also confirms its
expectations for fiscal 2024, which are for comparable revenue growth of 8 percent
to 11 percent and a profit margin of 8 percent to 10 percent.
Siemens
continues to expect profitable growth of its Industrial Business overall to
drive an increase in basic EPS from net income before purchase price allocation
accounting (EPS pre PPA) to a range of €10.40 to €11.00 in fiscal 2024,
excluding a positive €0.61 per share from Siemens Energy Investment in the
first quarter of fiscal 2024. With termination of equity method accounting
in the first quarter of fiscal 2024, Siemens Energy Investment is not
expected to have additional effects on EPS going forward. EPS pre PPA excluding
Siemens Energy Investment in fiscal 2023 was €9.93.
This
outlook excludes burdens from legal and regulatory matters.
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Siemens AG (Berlin and Munich) is a leading technology company focused on industry, infrastructure, transport, and healthcare. From more resource-efficient factories, resilient supply chains, and smarter buildings and grids, to cleaner and more comfortable transportation as well as advanced healthcare, the company creates technology with purpose adding real value for customers. By combining the real and the digital worlds, Siemens empowers its customers to transform their industries and markets, helping them to transform the everyday for billions of people. Siemens also owns a majority stake in the publicly listed company Siemens Healthineers, a globally leading medical technology provider shaping the future of healthcare.
In fiscal 2023, which ended on September 30, 2023, the Siemens Group generated revenue of €77.8 billion and net income of €8.5 billion. As of September 30, 2023, the company employed around 320,000 people worldwide. Further information is available on the Internet at
www.siemens.com.
Notes and forward-looking statements
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