After a record quarter, Siemens is raising its forecast for the full year

Siemens headquarters in Munich

Business at the technology group continues to go well. Sales of software and digital services have also increased recently.

(Photo: dpa)

Munich After a strong first quarter, Siemens has raised its forecast for the current fiscal year. “With a result of 2.7 billion euros in the industrial business, we have had the strongest start to a new financial year to date,” said CEO Roland Busch on Wednesday evening in Munich.

Despite the global uncertainties, the technology group was able to largely maintain its growth momentum. The digital business in particular continues to do well. This means that Busch can present good figures overall to the shareholders at the virtual general meeting on Thursday. The stock hardly reacted at all in after-hours trading.

Siemens even spoke of a “brilliant start” to the 2022/2023 fiscal year (September 30). Sales rose in the first quarter by a comparable eight percent to 18.1 billion euros. Incoming orders fell by eight percent to 22.6 billion euros. But it was also above the expectations of some analysts. In the same period of the previous year, large orders for the Mobility train division, among others, had increased the value.

Profits are falling in two sectors

The operating result improved in the first quarter by nine percent to 2.7 billion euros. This corresponds to a margin of 15.6 percent after 15.7 percent in the same period of the previous year.

However, only the Digital Industries division with industrial automation and Smart Infrastructure with building technology were able to increase profits. In contrast, the results at Siemens Healthineers – mainly due to the end of the rapid test boom – and at Mobility fell. The group’s net income fell by nine percent to 1.6 billion euros in the first quarter due to various special effects.

Siemens has become a growth company. Chairman of the Supervisory Board Jim Hagemann Snabe according to the text of the speech for the Annual General Meeting on Thursday

For the year as a whole, Busch now expects sales growth of seven to ten percent on a comparable basis for the group instead of the previous six to nine percent. The Digital Industries division is now expected to grow by up to 15 percent, Smart Infrastructure by up to twelve percent. Siemens also raised its earnings forecast slightly. The group is now assuming earnings per share before special effects of between EUR 8.90 and EUR 9.40 (previously EUR 8.70 to EUR 9.20).

In the past fiscal year 2021/2022, Siemens had already achieved a record operating profit of 10.3 billion euros. Sales had improved by a comparable eight percent to almost 72 billion euros. “Siemens has become a growth company,” said Chairman of the Supervisory Board Jim Hagemann Snabe at the Annual General Meeting on Thursday, according to the text of the speech. The group has gained market shares in important key markets.

The Digital Industries division is growing particularly strongly

The digital businesses have recently developed particularly well. The flagship division, Digital Industries, was able to increase sales by a comparable 15 percent to EUR 5.1 billion in the first quarter. The margin is a good 22.5 percent.

Siemens again did better than some of its competitors. The US specialist Rockwell Automation increased sales in the first quarter of 2022/2023 by almost ten percent to almost two billion dollars. Operating profit rose by around 13 percent to $401 million. This corresponded to a margin of 20.2 percent.

The Swiss competitor ABB increased sales in the fourth calendar quarter by 16 percent to $ 7.8 billion. Incoming orders increased by two percent to 7.6 billion dollars. Operating income improved 16 percent to $1.1 billion, a margin of 14.8 percent.

Investors are demanding even more speed

In the past few weeks, investors had praised the progress made at Siemens, but called for an even faster pace. “Operationally, everything is running smoothly at Siemens,” praised Vera Diehl, portfolio manager at Union Investment. But that’s not enough in the capital market. The stock underperformed last year. She advocated Siemens separating from Healthineers. “Siemens has to move away from the conglomerate structure, less is more.”

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Ingo Speich, Head of Sustainability and Corporate Governance at Deka Investment, said: “The path to becoming a digital group has been taken, but it will still take a long time.” to reduce competitors”.

The capital markets waited a long time to see whether Siemens would succeed in transforming itself into a high-growth digital group with a strong hardware base. But since October, given the good growth numbers and optimism for the current year, the price has risen by more than 40 percent.

More: Siemens balance sheet check – record operating profit, but investors want more

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