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

Munich After a strong first quarter, Siemens has raised its forecast for 2023. “It was a brilliant start to the new fiscal year for Siemens,” said CEO Roland Busch on Thursday when the figures were presented. “We are very satisfied.” The operating profit in the first quarter of 2022/23 was 2.7 billion euros, higher than ever at the beginning of the year.

Despite the global uncertainties, the technology group was able to largely maintain its growth momentum. Above all, the automation business related to the digital factory continues to do well. This means that Busch can present the shareholders with good figures overall at the virtual general meeting on Thursday.

“Due to strong demand for our portfolio, our businesses have eased their operating and capital spending restraint,” Busch said. The divisions invested again “gradually and in a targeted manner”. The investment programs that many countries have launched give the business momentum.

After a Supervisory Board meeting on Wednesday evening, Siemens presented the figures for the first quarter of the 2022/2023 fiscal year (September 30) a little earlier than planned – i.e. for the period from October to December. Sales increased by a comparable eight percent to 18.1 billion euros.

The growth also came about because Siemens processed the order backlog faster. “We are benefiting from the fact that the bottlenecks in the supply chains are decreasing,” said Busch. 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. The order book is now on a comparable basis at a record value of 102 billion euros.

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 the chairman of the supervisory board, Jim Hagemann Snabe, at the annual general meeting. 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 (DI) was able to increase sales by a comparable 15 percent to 5.1 billion euros in the first quarter. Automation technology grew disproportionately with a plus of 23 percent.

Siemens is the world market leader in this field. DI’s software sales, on the other hand, fell by 6 percent, according to Busch, as expected. This is mainly due to the switch to a software-as-a-service rental model. In the future, customers will pay regular fees for use instead of all at once for a license. Digital Industries’ 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.”

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

source site-16