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Press Release08 May 2020Siemens AGMunich
Robust performance in complicated times
“We delivered a robust quarter given the serious circumstances,” said
Joe Kaeser, President and CEO of Siemens AG. “I am particularly impressed with
my team that we are able to keep the original timeline for the spin-off of our
energy business. While we expect to reach the bottom in the third quarter of
fiscal 2020, we continue to keep the health and safety of our partners and
employees as our first priority, while maintaining business continuity as much
as responsibly possible.”
Spin-off of energy business on track – Outlook relativized
Siemens expects
the pandemic to have even stronger impacts on business development in the third
quarter. For the period beyond the third quarter, reliable estimates are not
yet possible. For this reason, Siemens will no longer confirm its original
guidance. Instead, the company expects a moderate decline in comparable revenue
in fiscal 2020, with the book-to-bill ratio remaining above 1. The decline in
demand is expected to have the strongest impact on the business activities of
Digital Industries and Smart Infrastructure. Siemens is adhering to its plan to
spin off and publicly list Siemens Energy before the end of fiscal 2020. The
company expects to record a spin-off gain, the amount of which cannot yet be
reliably forecast. Siemens also assumes that there will be material impacts on
net income from spin-off costs and tax expenses related to the carve-out and creation
of the subgroup Siemens Energy. Therefore, Siemens is currently refraining from
giving guidance for basic earnings per share (from net income) for fiscal 2020.
However, the
company is financially, in particular, very well prepared for the challenges
that COVID-19 will be posing in the coming months. “The company has a strong
rating and a very solid liquidity position,” said Ralf P. Thomas, Chief Financial
Officer of Siemens AG. “If needed, we have direct access to more than
€11.4 billion in net liquidity. In addition, we have a very resilient and
diversified business portfolio with a growing share from service and software.”
Share buyback program on hold due to spin-off
In the second
quarter, Siemens continued to rigorously drive the public listing of Siemens
Energy. Formation of the subgroup was successfully completed on April 1,
2020. The spin-off will be presented to shareholders for a vote at the
Extraordinary Shareholders’ Meeting on July 9, 2020. On
September 1, 2020, the new company is then to be presented to
analysts and investors at a Capital Market Day. Due to the ongoing spin-off
process, the share buyback program of Siemens AG, which is planned for the
period until November 2021, will be suspended for technical reasons. Plans
currently call for this program, which has a volume of up to €3 billion, to be
resumed once the spin-off is complete.
Ample order backlog despite coronavirus crisis
Due to the
planned spin-off, Siemens will report the activities of Gas and Power, together
with Siemens Gamesa Renewable Energy (SGRE), in its quarterly reporting as
discontinued operations, beginning with the second quarter of fiscal 2020. In
the second quarter, Siemens was noticeably impacted by the coronavirus pandemic
in the areas of volume, profit and cash. Orders declined 9% on a comparable
basis to €15.1 billion. Revenue was flat at €14.2 billion. With a backlog
of €69 billion, Siemens continues to have a very ample order cushion. In
addition, Siemens Energy has an order backlog of €81 billion. At
€1.6 billion, the adjusted EBITA for Siemens’ Industrial Business was only
18% lower year-over-year despite the challenging market environment. This
figure refers to the core of the future Siemens AG and includes the units
Digital Industries, Smart Infrastructure, Siemens Mobility and Siemens
Healthineers. However, discontinued operations posted a loss of €317 million
(Q2 2019: profit of €205 million). This figure reflects, among other things,
sharply lower adjusted EBITA in the energy business, including a loss at SGRE. It
also includes a substantial increase in tax expenses, mainly related to the
carve-out of Gas and Power. As a result, net income dropped 64% to €697
million. In this connection, it should be noted that the prior-year quarter
benefited from a sharply lower income tax rate from continuing operations
following the reversal of income tax provisions outside Germany.
Siemens Mobility is largely defying the corona crisis
“The implementation of our Vision 2020+ strategy is right on track,”
said Roland Busch, Deputy CEO of Siemens AG. “Digital Industries and Smart
Infrastructure still aim to achieve cost savings of €320 million and €300
million, respectively, by 2023, in addition to increasing their basic
productivity. Moreover, both units are making progress faster than planned. All
in all, they’re already set to exceed their interim targets for the coming year
by €165 million.”
Siemens
Mobility, an integral part of Siemens AG, was largely able to steer clear of
the effects of the coronavirus crisis in Q2. As of the end of March, the unit’s
order backlog stood at €32 billion. Despite pandemic-related restrictions
limiting access to customer locations, Siemens Mobility continued to
successfully execute its projects and increased its revenue by 6% on a comparable
basis. At 9.3% in Q2 (Q2 2019: 10.8%), its adjusted EBITA margin was again
within its target range. Siemens Mobility has achieved compound annual revenue
growth of 4% over the past five years.
Spin-off of Flender planned
Siemens is
also making solid progress in reorganizing the units within its Portfolio
Companies (POC). This applies particularly to Flender, the world’s leading manufacturer
of mechanical drive systems. Flender’s products are used in wind turbines and
many other industrial sectors.
Siemens is
therefore taking the next step and planning to integrate the POC unit Wind
Energy Generation into Flender. This transaction will complete the company’s
electrical and mechanical portfolio, making it an important tier-1 supplier to
the wind power industry. The combined company will be a technology leader with
a global presence, a competitive cost base and an attractive service business.
Flender’s pro forma annual revenue will amount to roughly €2 billion. In a
second step, Siemens intends to publicly list the company via a spin-off.
Siemens’ shareholders will vote on the related proposal at the next ordinary
Annual Shareholders’ Meeting in February 2021.
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Siemens AG (Berlin and Munich) is a global technology powerhouse that has stood for engineering excellence, innovation, quality, reliability and internationality for more than 170 years. The company is active around the globe, focusing on the areas of power generation and distribution, intelligent infrastructure for buildings and distributed energy systems, and automation and digitalization in the process and manufacturing industries. Through the separately managed company Siemens Mobility, a leading supplier of smart mobility solutions for rail and road transport, Siemens is shaping the world market for passenger and freight services. Due to its majority stakes in the publicly listed companies Siemens Healthineers AG and Siemens Gamesa Renewable Energy, Siemens is also a world-leading supplier of medical technology and digital healthcare services as well as environmentally friendly solutions for onshore and offshore wind power generation. In fiscal 2019, which ended on September 30, 2019, Siemens generated revenue of €86.8 billion and net income of €5.6 billion. At the end of September 2019, the company had around 385,000 employees worldwide. Further information is available on the Internet www.siemens.com.
This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. We may also make forward-looking statements in other reports, prospectuses, in presentations, in material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens’ management, of which many are beyond Siemens’ control. These are subject to a number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the chapter Report on expected developments and associated material opportunities and risks of the Annual Report, and in the Half-year Financial Report, which should be read in conjunction with the Annual Report. Should one or more of these risks or uncertainties materialize, events of force majeure, such as pandemics, occur or should underlying expectations including future events occur at a later date or not at all or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.
This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens’ net assets and financial positions or results of operations as presented in accordance with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Contact
Jürgen Homeyer
Siemens AG
Werner-von-Siemens-Straße 1
80333 Munich
Germany
80333 Munich
Germany
+49 (89) 636-22804
Wolfram Trost
Siemens AG
Werner-von-Siemens-Straße 1
80333 Munich
Germany
80333 Munich
Germany
+49 (89) 636-34794