Siemens Energy – Earnings Release Q3 FY 2024: Siemens Energy on track to meet full-year guidance including an improved cash outlook

Earnings Release Q3 FY 2024 

 

 

April 1 to June 30, 2024

 

Munich, Germany, August 7, 2024 – Siemens Energy today announced its results for the third quarter of fiscal year 2024 that ended June 30, 2024.

“The rapidly growing electricity market requires a wide range of our products. Especially our grid and gas turbine businesses are benefiting from this momentum. Importantly, with growing our order backlog, we have been able to improve its margin quality as well. Despite all the challenges, we are optimistic about the future and after the first nine months, we are well on track to meet our full-year guidance”, says Christian Bruch, President and CEO of Siemens Energy AG. 

 

• During the third quarter of the fiscal year, Siemens Energy continued to benefit from the energy transition, with record order intake at Gas Services and record order backlog in both Gas Services and Grid Technologies. 
• Gas Services’ orders more than doubled year-over-year, orders of Siemens Energy overall decreased from a high level of comparison, mainly at Siemens Gamesa, and due to timing shifts at Grid Technologies. The decline was 29.6% on a comparable basis (excluding currency translation and portfolio effects) and orders came in with €10.4bn. The book-to-bill ratio (ratio of orders to revenue) remained above 1, driving the order backlog to another record high of €120bn. 
• Revenue grew by 18.5% on a comparable basis to €8.8bn with substantial growth at Grid Technologies, Transformation of Industry and Siemens Gamesa. 
• Siemens Energy’s Profit before Special items again was positive with €49m (Q3 FY 2023: negative €2,048m). Prior-year’s quarter was heavily burdened by quality issues in Siemens Gamesa’s onshore business as well as increased product costs and ramp-up challenges in the offshore business. Special items were positive €69m (Q3 FY 2023: negative €41m) primarily related to the ongoing progress on disposals and the accelerated portfolio transformation. Profit for Siemens Energy came in at positive €119m (Q3 FY 2023: negative €2,089m). 
• Siemens Energy reported a Net loss of €102m (Q3 FY 2023: €2,931m). Corresponding basic earnings per share (EPS) were negative €0.16 (Q3 FY 2023: negative €3.42). 
• Free cash flow pre tax was €727m (Q3 FY 2023: €27m) with positive contributions by all segments except Siemens Gamesa which continued to be negative, as expected. 
• Due to the good development in the first nine months, we now expect a positive Free cash flow pre tax in a range of €1.0bn to €1.5bn for the fiscal year (previously up to €1.0bn).

 

 

 

Siemens Energy

• As expected, orders were below prior-year’s high level mainly driven by decreases at Siemens Gamesa and Grid Technologies, due to a sharply lower volume from large orders particularly in the new units business, which more than offset a sharp increase at Gas Services. 
• Book-to-bill ratio came in at 1.18. Order backlog once again exceeded the previous record level and rose to €120bn. 
• Revenue grew significantly both on increases in service revenue and growth in the new units business. 
• Profit before Special items and the corresponding margin sharply improved as prior-year’s quarter was heavily impacted by Siemens Gamesa’s loss. In addition, Siemens Energy overall showed a strong operational performance while results were held back by one-time effects from legacy projects at Gas Services and Transformation of Industry. 
• Special items in the quarter were positively impacted by the ongoing progress on disposals and the accelerated portfolio transformation. 
• Sharp improvement of Free cash flow pre tax was primarily driven by Grid Technologies reflecting higher profitability, consistent asset management and order momentum

 

Gas Services

• Highest orders in a quarter to date mainly due to large service contract wins in the Middle East. Orders were sharply above prior-year’s level primarily due to a much higher volume from large orders. Growth in the service business clearly exceeded the increase in orders in the new units business. 
• Book-to-bill ratio was 1.92. The order backlog rose to €45bn. 
• Revenue was slightly above the level of the prior year. Clear growth in the service business more than offset the decrease in the new unit business due to timing effects. 
• Profit before Special items and corresponding margin were below the strong prior-year’s basis. An overall solid operational performance was burdened by negative one-time effects including the aforementioned legacy project.

 

Grid Technologies

• Orders declined due to timing effects and, in addition, because of the high prior-year basis of comparison which included an exceptional large order for offshore grid connections in the North Sea. The decrease related to the grid solution business, while the product business showed sharp growth benefiting from strong global demand, primarily in the U.S. and Germany. 
• Grid Technologies reported a Book-to-bill ratio of 1.54 and the order backlog rose to €31bn. 
• Revenue again grew substantially, mainly in the solution and product businesses. 
• Profit before Special items rose sharply and the corresponding margin improved significantly. In light of an overall strong operational performance the improvement was driven by higher volume and comparatively higher margin of the processed order backlog.

 

Transformation of Industry

• Orders decreased due to a high basis of comparison in the prior year, mainly in the Electrification, Automation, Digitalization business. 
• The order backlog was on previous quarter’s level of €8bn. Book-tobill ratio was 0.86 for the quarter. 
• Revenue substantially increased year-over-year with all businesses contributing double-digit growth fueled by continued service momentum and strong execution of the order backlog. 
• Improvement of Profit before Special items and the corresponding margin was driven by strong operational performance, higher margin quality of the order backlog and increased volume especially in the service business, over-compensating a one-time effect related to a legacy project.

 

Siemens Gamesa

• As expected, orders were sharply down compared to a strong prioryear quarter. Onshore orders continued to be impacted by a temporary interruption of sales activities for the 4.X and 5.X turbines. In addition, the offshore and service businesses reported exceptional large orders in the prior year including a single offshore order worth €2.3bn. 
• Book-to-bill ratio came in at 0.26. The order backlog decreased to €37bn. 
• Revenue grew substantially with all businesses contributing to the growth, but led by the offshore business in part reflecting a reduced basis of comparison due to the reversal of revenue in the prior-year quarter associated with the circumstances mentioned below. 
• Profit before Special items again was negative, as expected. The reason were still the 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 which also heavily burdened prior-year’s quarter. In addition, recent quarter profit was negatively impacted because of the standard annual updating of the statistical models utilized for the evaluation of the entire wind turbine fleet. Changes in the estimates for new, existing and potential agreements with customers in major projects had an offsetting effect.

 

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 continue to expect Siemens Energy to achieve a comparable revenue growth (excluding currency translation and portfolio effects) in a range of 10% to 12%. Profit margin before special items is expected between negative 1% and positive 1%. We expect a Net income of up to €1bn including impacts from disposals and the acceleration of the portfolio transformation.

Due to the good development in the first nine months, we now expect a positive Free cash flow pre tax in a range of €1.0bn to €1.5bn (previously up to €1.0bn). We continue to expect proceeds from disposals and the acceleration of the portfolio transformation of around positive €3.0bn. 

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 2% to 0% and a Profit margin before special items of 9% to 11%. 
• Grid Technologies plans to achieve a comparable revenue growth of 32% to 34% and a Profit margin before special items between 8% and 10%. 
• Transformation of Industry expects a comparable revenue growth of 14% to 16% and a Profit margin before special items of 5% to 7%. 
• Siemens Gamesa assumes a comparable revenue growth of 10% to 12% and a negative Profit before special items of up to €2.0bn (previously around €2bn).

 

 

Notes and forward-looking statements 

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

You can also follow the conference call for analysts and investors live at www.siemens-energy.com/analystcall starting at 10:00 a.m. CEST today.

Recordings of both conference calls will be made available afterwards.

The financial publications can be downloaded at: https://www.siemens-energy.com/q3-fy2024. 

 

This document contains statements related to our future business and financial performance, and future events or developments involving Siemens Energy that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. We may also make forward-looking statements in other reports, prospectuses, in presentations, in material delivered to shareholders, and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens Energy´s management, of which many are beyond Siemens Energy´s control. These are subject to a number of risks, uncertainties, and other factors, including, but not limited to, those described in disclosures, in particular in the chapter “Report on expected developments and associated material opportunities and risks” in the Annual Report. Should one or more of these risks or uncertainties materialize, should acts of force majeure, such as pandemics, occur, or should underlying expectations including future events occur at a later date or not at all, or should assumptions not be met, Siemens Energy´s actual results, performance, or achievements may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens Energy neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. This document includes supplemental financial measures – that are not clearly defined in the applicable financial reporting framework – and that are or may be alternative performance measures (nonGAAP-measures). These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens Energy´s net assets and financial position or results of operations as presented in accordance with the applicable financial reporting framework in its consolidated financial statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

 

This document is a Quarterly Statement according to § 53 of the Exchange Rules for the Frankfurter Wertpapierbörse.

 

 

 

 

Financial Results 

Third quarter of fiscal year 2024

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

 

 

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