Good first quarter: Siemens defies the corona pandemic

Thursday, January 21, 2021

Good first quarter
Siemens is defying the corona pandemic

In the middle of the Corona crisis, Siemens can look forward to good figures in the new fiscal year. In China in particular, business has "grown significantly," the company said. Now the group is even considering increasing its forecasts for 2020/21.

Siemens CEO Joe Kaeser will be able to say goodbye in the middle of the Corona crisis in early February with an unexpected increase in profit. According to preliminary figures, the two core divisions, Industrial Automation and Infrastructure, both increased their operating profit significantly in the first quarter of the 2020/21 financial year (as of the end of September) and thus surprised the analysts. The Zug Mobility division maintained its earnings level between October and December despite the crisis, as the Munich technology group announced.

In its core business, Siemens even benefited from the restrictions in the corona pandemic because it saved travel costs and marketing expenses. Consolidated figures – including the listed medical technology subsidiary Siemens Healthineers – will only be announced by the group at the annual general meeting on February 3, at which Kaeser resigns after more than seven years at the helm of Siemens.

Operationally, his successor, Roland Busch, has been in charge since October. If Siemens Healthineers does not fall short of analysts' expectations in the first quarter, Siemens can expect an operating profit (adjusted Ebita) of more than two (previous year: 1.53) billion euros and almost stable sales of 13.0 (13.1) Billion euro. Analysts previously trusted the group with only 1.67 billion euros Ebita and 12.7 billion euros in sales.

Business in China "grew significantly"

The preliminary quarterly figures drove the Siemens share in late trading by three percent to an annual high of 126.30 euros. Siemens was driven by demand from China, which has largely survived the crisis as the country of origin of the pandemic. There the business "grew significantly, explained Siemens. It went best at Digital Industries, where the group sells systems and software for industrial automation.

The Ebita of the figurehead soared by 57 percent to 848 million euros after the short-cycle business with the high margins quickly recovered. Analysts had given Siemens a good 250 million less on average. Digital Industries sales increased by five percent after adjusting for currency effects to 3.76 billion euros. The Smart Infastructure division, which deals with construction and infrastructure technology, increased its Ebitda by 39 percent to 391 million euros, sales increased by four percent after adjusting for currency effects. The traffic technology division Mobility lagged slightly behind analyst estimates in terms of sales, but kept the Ebitda at the previous year's level of 219 million euros – before the Corona outbreak.

Thanks to some major Zug orders, the orders from Alstom's competitor shot up by two thirds. Siemens Healthineers plans to present its quarterly figures on February 1st. Analysts then expect an average Ebita of 550 (492) million euros. The medical technology division, which has also entered the corona test business, could even be given a tailwind by the pandemic.

After the successful start, Siemens is evidently considering increasing its forecasts for 2020/21. The announcement said that they would "review the outlook" by February 3. At the time, CFO Ralf Thomas actually expected that business would only pick up again in the second half of the financial year after the crisis. That should then help Siemens to achieve a "moderate" increase in sales of three to five percent. The net profit should increase by the same amount.