Earnings forecast increased
Siemens has made a strong start to the new fiscal year
2/9/2023 7:42 am
Siemens is defying the economy better than expected: The technology group exceeded analysts’ expectations in the first quarter – and sees itself in an excellent position for the new fiscal year. Investors are also convinced by the optimism.
Siemens is coming through the economic downturn better than expected. The board of directors of the Munich technology group has raised its sales and profit forecast for the current 2022/23 financial year (as of the end of September) after a record quarter. CEO Roland Busch spoke of the “strongest start to a new financial year so far”.
Sales in the months from October to December were 18.1 billion euros, up eight percent on the previous year, and incoming orders held up better than analysts had estimated. Siemens surprisingly increased the operating result by nine percent to 2.7 billion euros, the experts had assumed a stagnant result. “With full order books and temporarily targeted higher purchases of critical stocks, we are well prepared for further profitable growth in the coming quarters,” said CFO Ralf Thomas before today’s Annual General Meeting, which will only be held in virtual format for the third time.
Siemens is now forecasting comparable sales growth of seven to ten (previously six to nine) percent. Adjusted earnings per share should also be higher than planned at EUR 8.90 to 9.40 (previously EUR 8.70 to 9.20). 16 analysts surveyed by Siemens had only expected sales and profits at the lower end of the previous forecasts for 2022/23. The industrial automation division Digital Industries in particular is currently developing better than expected, but so is the business with infrastructure and building technology.
Net income should also increase significantly more than expected in the financial year. In the first quarter, however, it fell to 1.6 (2021/22: 1.8) billion euros. Last year, a billion-dollar write-down on the stake in the energy technology group Siemens Energy had depressed profits. Siemens had already started the fiscal year with an order backlog of more than 100 billion euros and is therefore able to absorb the difficult economic situation well.
Optimism attracts investors
So far, there has been little sign of this in terms of incoming orders. In the first quarter, it fell by eight percent to 22.6 billion euros. But that was mainly due to billions in orders for trains last year and the fact that customers had ordered more in view of fragile supply chains. But Siemens hardly had to contend with supply problems. The trend that incoming orders are greater than sales is not expected to change in the coming months.
Siemens’ flagship, Digital Industries, now expects sales growth of between 12 and 15 (previously 10 to 13) percent and a margin of 20 (previously 19) to 22 percent for the full year. With sales growth of nine to twelve (previously eight to eleven) percent, smart infrastructure is expected to yield a margin of 13.5 to 14.5 percent, half a percentage point more than before. Operating profit there soared by almost half in the first quarter. The train division, which has so far been on the spot in terms of earnings, is on schedule. An increase in sales of six to nine percent and a margin of eight to ten percent are expected here.