Dusseldorf After a strong quarter, Siemens has again increased its forecast for the current fiscal year. “Siemens continues its excellent performance and achieved several records,” said CEO Roland Busch on Wednesday. The order backlog reached a new high, and the core divisions Digital Industries and Smart Infrastructure earned more from January to March than in any other quarter.
In the second quarter of 2022/23 (September 30), the turnover of the DAX group increased by a comparable 15 percent to 19.4 billion euros. The operating result improved by 47 percent to a good 2.6 billion euros. The high growth was also due to the fact that the Russian sanctions had depressed the results of the train division in the same period of the previous year.
Profit after tax rose from 1.2 to almost 3.6 billion euros, mainly due to the price recovery at Siemens Energy. On average, analysts had expected sales to increase by eight percent to EUR 18.6 billion. The estimates for the operating result were 2.7 billion euros.
Busch wants to double digital sales in the long term
The software and digital businesses in particular grew significantly. In the first half of the financial year, they increased from 3.0 to 3.4 billion euros – although the group is currently switching to a “Software-as-a-Service” rental model, which is initially depressing sales.
Siemens is thus making further progress in the transformation towards a digital group. In an interview with the Handelsblatt, Busch announced that he wanted to double the share of software and digital business in total sales to 20 percent in the long term.
Siemens is currently in the right position, said Harald Smolak, partner at the management consultancy Atreus, who used to be a Siemens manager himself. “The combination of the traditional product business and the new platform solution business offers attractive opportunities on the market.”
However, there is a lot of competition. Siemens must be at the forefront of topics such as artificial intelligence and constantly refill the innovation pipeline. “This is the only way to assert oneself against the competitors from the USA in the long term and to gain market share there.”
Originally, Siemens had forecast sales growth of six to nine percent for the current fiscal year, but then raised the range by one percentage point in February. After the second forecast increase, Busch now expects sales growth of nine to eleven percent for the year as a whole.
The forecast for earnings per share before special items is now between EUR 9.60 and EUR 9.90. Initially it was 8.70 to 9.20 euros, after the first increase it was 8.90 to 9.40 euros. Including the special effect, it should be 11.61 to 11.91 euros.
Siemens had made a high write-down on the 30 percent stake after Siemens Energy’s share price crashed. After an increase in the price, Siemens was able to write again. This now brought a tax-free profit of 2.6 billion euros.
Business has been very solid across the board in recent months. However, the medical technology, spoiled by success, had to struggle with problems. The exit from the business with robotic systems for the treatment of heart problems led to high write-downs, and the drastically reduced demand for corona tests also made itself felt. The bottom line is that Siemens Healthineers’ profits fell by 81 percent to 108 million euros.
Competitor Rockwell had also increased significantly
The flagship division Digital Industries was able to increase sales by 23 percent to 5.5 billion euros. Incoming orders fell by ten percent because the industry cooled off somewhat cyclically. The operating result increased by 57 percent to 1.3 billion euros, which corresponded to a margin of 23.5 percent.
For comparison: The large US competitor Rockwell Automation increased sales in the second quarter of 2022/23 (September 30) by a comparable 27 percent to $ 2.3 billion. Operating profit even rose by 70 percent to $484 million, which corresponded to a margin of 21.3 percent.
Siemens’ European competitor ABB also had a good start to the new year. Revenues increased 22 percent to $7.9 billion in the first quarter. The Swiss improved the operating result (EBITA) by a third to 1.3 billion euros. This meant a return on sales of 16.3 percent. “Customer activity in the first quarter was lively,” said CEO Björn Rosengren – and raised the forecast for the full year.
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