Munich After a strong start to the new fiscal year, Siemens boss Roland Busch has promised further growth to the shareholders who are pushing for further progress. “We take it sporty: It’s always faster,” said the CEO on Thursday before the Annual General Meeting. Acquisitions are also conceivable. However, Siemens is currently gaining market shares from its own resources and is well on the way.
Before the shareholders’ meeting, Busch had presented good figures for the first quarter of the current fiscal year 2022/23 (September 30) and increased the profit and sales forecasts. The Siemens share was then the strongest Dax value with a plus of more than eight percent to 151 euros.
Investors certainly praised the progress. “Mr. Busch got the tanker back on the road,” said Ingo Speich, Head of Sustainability and Corporate Governance at Deka Investment. “At Siemens, profits and cash flow are bubbling up.”
However, Siemens lags far behind its competitors when it comes to market valuations. Siemens is not active enough in terms of acquisitions and share sales. “Hardly anything happened here.”
There are “numerous pearls in the Siemens treasure chest waiting to be discovered by the capital market”. Portfolio manager Vera Diehl from Union Investment advocated Siemens separating from Healthineers. “Siemens has to move away from the conglomerate structure, less is more.”
Chairman of the Supervisory Board Jim Hagemann Snabe demonstratively praised Busch’s leadership. “Siemens has become a growth company.” From 2009 to 2019, the group grew by an average of only two percent per year. Since then, the group has accelerated significantly.
The trend was confirmed in the first quarter of 2022/23. Sales increased – also due to price increases – 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.
The new orders go back
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.
“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.
Investors are worried about a possible excessive dependence on China. The Handelsblatt had reported that Busch wants to use the internal project “Marco Polo” to, among other things, double the sales of the core division Digital Industry by 2025.
The head of the supervisory board demonstratively praised Busch’s leadership.
(Photo: dpa)
“Siemens must keep an eye on the dependencies on individual countries and regions, including geopolitical risks, and ensure more diversification,” explained Speich from Deka. This applies “particularly” to Busch’s China strategy.
Profits are falling in two sectors
The operating result improved from October to December by nine percent to 2.7 billion euros. This was the highest figure so far in a first quarter and 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.
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.
The Digital Industries division is growing particularly strongly
Recently, the flagship division Digital Industries (DI) has developed particularly well. In the first quarter, sales increased by a comparable 15 percent to 5.1 billion euros. 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.
Siemens has become a growth company. Chairman of the Supervisory Board Jim Hagemann Snabe on Thursday
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 50 percent.
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