Siemens Energy – Earnings Release Q1 FY 2024: Solid start to the year, turnaround of wind business remains focus

Munich, Germany, February 7, 2024 – Siemens Energy today announced its results for the first quarter of fiscal year 2024 that ended December 31, 2023. 

 

Solid start to the year, turnaround of wind business remains focus

 

“The solid first quarter is encouraging, in part also due to project shifts, which are normal in plant engineering, especially with the market dynamics we are currently seeing. That is why our focus remains on solving the quality problems in our onshore wind business and making the most of the growth potential for the rest of the company”, says Christian Bruch, President and CEO of Siemens Energy AG.

 

• Siemens Energy’s business development in the first quarter of the fiscal year was supported by continued favorable energy market trends. With a strong order development, in particular Grid Technologies and Transformation of Industry were able to take advantage of these favorable conditions leading to the highest orders in a quarter to date. 
• For the full fiscal year, Siemens Energy confirms its previously communicated outlook. 
• Orders increased year-over-year by 23.9% on a comparable basis (excluding currency translation and portfolio effects) to €15.4bn. The book-tobill ratio (ratio of orders to revenue) was slightly above 2, driving the order backlog to a new high of €118bn. 
• Revenue came in at €7.6bn reflecting a 12.6% increase on a comparable basis. While all segments contributed to growth, the increase was particularly strong at Grid Technologies. 
• Siemens Energy’s Profit before special items sharply improved to positive €208m. Prior year quarter’s result came in, burdened by quality related charges at Siemens Gamesa, at negative €282m. Special items amounted to positive €1,670m (Q1 FY 2023: negative €103m), driven by a pretax gain related to the sale of an 18 percent stake in Siemens Limited, India, of €1,729m. As a result, Profit for Siemens Energy came in at positive €1,878m (Q1 FY 2023: negative €384m). 
• Due to the special items, Siemens Energy showed a Net income of €1,582m (Q1 FY 2023: Net loss €598m). Corresponding basic earnings per share (EPS) were positive €1.79 (Q1 FY 2023: negative €0.60). 
• Free cash flow pre tax was negative with €283m (Q1 FY 2023: negative €58m). The decrease was primarily due to Siemens Gamesa, which suffered a high cash outflow due to a loss and a build-up of operating net working capital in a seasonal weak quarter. Related to the sale of the stake in Siemens Limited, India, Siemens Energy recorded a cash inflow of nearly €2.1bn which is not reflected in Free cash flow pre tax however contributing to Adjusted Net cash.

 

 

Siemens Energy

• Orders exceeded prior-year’s high comparative basis primarily due to growth at Grid Technologies and Transformation of Industry. Based on a substantially higher volume from large orders all segments reported an increase. 
• Book-to-bill ratio came in at 2.01. Therefore, the order backlog once again exceeded the previous record level and rose to €118bn. 
• Revenue increased significantly. All segments contributed to the growth with a substantial rise at GT. 
• Service revenue improved significantly and growing somewhat stronger than the new unit business. 
• Profit before Special items sharply increased with all segments improving or around prior year’s level. Prior year’s quarter was burdened by quality related charges at Siemens Gamesa of €0.5bn. 
• Special items included the pre-tax gain from the sale of the centrally held stake in Siemens Limited, India, reported under Reconciliation to Consolidated Financial Statements (as strategic portfolio decisions). 
• Negative Free cash flow pre tax was driven by Siemens Gamesa which more than offset positive contributions from all other segments.

 

 

Gas Services

• Orders increased year-over-year, mainly due to a significantly higher volume from large orders especially in Eastern Europe and Central Asia. This more than offset a decrease in the Americas region from the high prior year’s level. 
• Book-to-bill ratio was 1.53. The order backlog rose to €42bn. 
• Clear revenue increase in a seasonally strong quarter, with the service business making the higher contribution to growth in absolute terms. 
• Profit before Special items nearly on the high level of prior year’s quarter benefiting from increased service revenue and timing effects.

 

 

Grid Technologies

• Exceptionally high orders exceeded an already outstanding level in prior year’s quarter mainly driven by Grid Technologies’ product business and high-voltage direct current (HVDC) transmission system orders in Germany, in part benefiting from timing effects. 
• Grid Technologies reported a Book-to-bill ratio of 3.96 with the order backlog rising to €28bn. 
• Revenue grew substantially in all businesses with main contributions both from the product and solution businesses. 
• Profit before Special items and the corresponding margin rose sharply driven by higher volume as well as a comparatively higher margin of the processed order backlog. 
• Negative Special items mainly in connection with the signed deal to sell the Trench business (reported under strategic portfolio decisions).

 

 

Transformation of Industry

• A sharp increase of orders year-over-year was mainly driven by two large orders in the Compression and in Industrial Steam Turbines & Generators businesses. 
• Book-to-bill ratio was 1.44. The order backlog at the end of the quarter amounted to €7bn. 
• Revenue was above prior-year quarter’s level in all businesses, at least with significant growth, based on execution of a strong order backlog and continuing service strength, particularly in the Compression and Industrial Steam Turbines & Generators businesses. 
• Profit before Special items nearly doubled year-over-year driven by higher revenue, better pricing, and increased service revenue.

 

 

Siemens Gamesa

• Orders were slightly above prior year quarter’s level on a comparable basis as offshore and service businesses reported clear and significant increases, respectively while onshore orders more than halved, largely due to a temporary interruption of sales activities for the 4.X and 5.X onshore turbines. Growth in the reporting regions Asia, Australia and EMEA offset a sharp decline in the Americas. 
• Book-to-bill ratio came in at 0.77. The order backlog decreased to €41bn. 
• Revenue grew moderately based on increased service revenue which more than offset a decline in the onshore and offshore businesses. 
• Profit before Special items was negative but sharply improved compared to prior year’s quarter which included charges of €472m related to quality issues. Recent quarter’s result was driven by project margins burdened by higher planned costs due to the known quality issues as well as the increased product costs and ramp-up challenges in the offshore area in the prior fiscal year.

 

Reconciliation to Consolidated Financial Statements

Reconciliation to Consolidated Financial Statements includes items, which management does not consider to be indicative of the segments’ performance – mainly group management costs (management and corporate functions) and other central items, Treasury activities as well as eliminations. Other central items include Siemens brand fees, corporate services (e.g. management of the Group’s real estate portfolio except Siemens Gamesa), corporate projects, centrally held equity interests and other items.

 

Outlook

We confirm our outlook for fiscal year 2024. We expect for Siemens Energy a comparable revenue growth (excluding currency translation and portfolio effects) in a range of 3 % to 7 % and a Profit margin before special items between negative 2 % and positive 1 %. Furthermore, we expect a Net income of up to €1bn including impacts from disposals and the acceleration of the portfolio transformation. We assume a negative Free cash flow pre tax of around €1.0bn. In addition, we expect proceeds in a range of positive €2.5bn to €3.0bn from disposals and the acceleration of the portfolio transformation.

The outlook for Siemens Energy does not include charges related to legal and regulatory matters.

 

Overall assumptions per business area 

• Gas Services assumes a comparable revenue growth of negative 4 % to 0 % and a Profit margin before special items of 9 % to 11 %. 
• Grid Technologies plans to achieve a comparable revenue growth of 18 % to 22 % and a Profit margin before special items between 7 % and 9 %. 
• Transformation of Industry expects a comparable revenue growth of 8 % to 12 % and a Profit margin before special items of 5 % to 7 %. 
• Siemens Gamesa assumes a comparable revenue growth of 0 % to positive 4 % and a negative Profit before special items of around €2bn

 

Notes and forward-looking statements

The press conference call on Siemens Energy’s financial results of the first quarter of fiscal year 2024 will be broadcasted live for journalists at https://www.siemens-energy.com/pressconference starting at 8:30 a.m. CET today.

You can also follow the conference call for analysts and investors live at www.siemens-energy.com/analystcall starting at 11:30 a.m. CET today.

Recordings of both conference calls will be made available afterwards.

The financial publications can be downloaded at: https://www.siemens-energy.com/q1-fy2024.

 

 

 

Financial Results 

First quarter of fiscal year 2024

Key figures (in millions of €, except where otherwise stated)

Volume

 

Profitability

 

Capital Structure and Liquidity

 

Employees

 

 

Consolidated Statements of Income

 

 

Consolidated Statements of Comprehensive Income

 

 

Consolidated Statements of Financial Position

 

 

Consolidated Statements of Cash Flows

 

 

Overview of Segment figures

 

 

EBITDA Reconciliation

 

 

Orders & Revenue by region (location of customer)

 

 

Disaggregation of external revenue of segments