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Earnings Release and Financial Results Q3 FY 2016: Strong execution drives growth and profitability – earnings outlook raised

04 August 2016

"We are making good progress with execution of Vision 2020 and in the third quarter again achieved convincing results, particularly compared to the market. I am proud of my global team which delivered excellent performance, especially with regard to growth, in an increasingly difficult market environment."Joe Kaeser, President and Chief Executive Officer of Siemens AG

  • Large orders in Europe and the Americas drive third-quarter orders up 6% year-over-year, to €21.1 billion; revenue 5% higher at €19.8 billion, for a book-to-bill ratio of 1.06

  • Excluding currency translation effects, orders rose 10% and revenue was 9% higher

  • Industrial Business profit climbs 20% year-over-year, to €2.2 billion; significant margin expansion takes Industrial Business profit margin up to 10.8%

  • Net income of €1.4 billion, level with the prior-year quarter which benefited from favorable interest rates within continuing operations and positive tax effects within discontinued operations; basic earnings per share (EPS) of €1.64 compared to €1.65 in Q3 FY 2015

  • Negative currency translation effects took four percentage points from order development and three percentage points from revenue growth; portfolio effects added one percentage point to order growth and two percentage points to revenue development

  • Large orders, particularly in Power and Gas and Wind Power and Renewables, continued to drive order growth

  • Industrial Business order backlog with new high at €116 billion

  • Revenue increase driven by double-digit growth in Power and Gas and in Wind Power and Renewables

  • Profit Industrial Business: improvements in a majority of the Divisions, particularly in Power and Gas, Energy Management and Wind Power and Renewables; market headwinds still ongoing for Process Industries and Drives

  • Income from continuing operations rose on higher Industrial Business profit, partly offset by factors outside Industrial Business. These factors included a negative swing related to major asset retirement obligation, due primarily to lower interest rates; an increase in interest expenses, resulting from issuance of debt; and higher income tax expenses, due mainly to a low basis of comparison in Q3 FY 2015

  • Net income: income from discontinued operations of €35 million compared to €131 million in Q3 FY 2015, which benefited from positive tax effects related to previously divested businesses

  • Increase in Free cash flow from Industrial Business, to €1.914 billion from €1.157 billion in Q3 FY 2015,driven by Power and Gas and Energy Management due mainly to positive effects from working capital management

  • Cash outflows of €0.9 billion related to the acquisition of CD-adapco, payments are not part of Free cash flow

  • ROCE declined due to a clear increase in average capital employed, mainly resulting from the acquisition of Dresser-Rand at the end of Q3 FY 2015

Outlook

We raise our previous expectation for basic EPS from net income in the range of €6.00 to €6.40 to the range of €6.50 to €6.70. We continue to expect for fiscal 2016 moderate revenue growth, net of effects from currency translation. We continue to anticipate that orders will materially exceed revenue for a book-to-bill ratio clearly above 1. For our Industrial Business, we continue to expect a profit margin of 10% to 11%.

This outlook exludes charges related to legal and regulatory matters.


Elisavet-Vasiliki Sachinidou 

 elisavet.sachinidou@siemens.com