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Q1 FY 2018 (October 1 to December 31, 2017) - Strong order growth highlights successful first quarter

02 February 2018

»The first quarter underlines the strength of our company. We take advantage of the growth momentum of the global
economic upturn and set benchmarks in industrial digitalization. We clearly understand our opportunities and we know what
we have to do,« said Joe Kaeser, President and Chief Executive Officer of Siemens AG.

  • Orders rose 14% to €22.5 billion and revenue was up 3% at €19.8 €billion, including strong growth contributions from
    Mobility and Digital Factory and new business particularly resulting from the merger of Siemens’ wind power business with Gamesa Corporación Tecnológica, S.A.

  •  Book-to-bill ratio rose to reach 1.13, the highest ratio since booking of large Egypt orders in Q2 FY 2016

  • On a comparable basis, excluding currency translation and portfolio effects, orders increased 7% and revenue grew 1%

  • Industrial business profit at €2.2 billion, down 14% due mainly to a sharp decline in Power and Gas which more than offset excellent performance in the short-cycle businesses and Mobility; current quarter impacted by negative currency effects while Q1 FY 2017 benefited from a portfolio gain; Industrial business profit margin at 11.0%

  • Net income rose 12% to €2.2 billion; the current period included a largely tax-free gain from the sale of shares in OSRAM
    Licht AG and benefited from sharply lower income tax expenses due mainly to the revaluation of future tax positions
    following U.S. tax reform; basic earnings per share (EPS) increased to €2.68 from €2.41 in Q1 FY 2017

Siemens adopted the accounting standard IFRS 15 (Revenue from 2018. Prior-period amounts are presented on a comparable basis.

  • Significant order growth driven mainly by portfolio effects at Siemens Gamesa Renewable Energy (SGRE), which was formed via merger between the periods under review, a higher volume from large orders at Mobility, and higher order intake in Digital Factory

  • Order backlog for the Siemens Group rose to €128 billion

  • Higher revenue includes sharp growth at SGRE due to the merger and double-digit growth in Mobility and Digital Factory;
    as expected, continuing significant revenue decline in Power and Gas

  • Negative currency translation effects took five percentage points from order growth and four percentage points from
    revenue growth; portfolio transactions added 12 percentage points to order growth and six percentage points to revenue growth

  • Profit Industrial Business declined due mainly to Power and Gas where profit nearly halved year-over-year due to ongoing structural market changes, and to Healthineers which was impacted by negative currency effects that to a lesser extent also impacted the majority of other industrial businesses; strong performance in Digital Factory, which in Q1 FY 2017 benefited from a €172 million gain related to the contribution of its eCar business to a joint venture, and in Mobility where profit rose substantially

  • Outside Industrial Business, Centrally managed portfolio activities (CMPA) posted a profit of €605 million driven by a
    largely tax-free €655 million gain from the sale of OSRAM Licht AG shares, up from €409 million in Q1 FY 2017 which included a significant positive result related to a major asset retirement obligation; this increase was largely offset by higher amortization of intangible assets acquired in business combinations resulting mainly from the SGRE merger and the
    acquisition of Mentor Graphics

  • Income from continuing operations and net income rose because of sharply lower income tax expenses due mainly to a
    net positive effect of €437 million from the revaluation of future tax positions following U.S. tax reform

  • Increase in Free cash flow from Industrial Business to €1.587 billion from €1.286 billion in Q1 FY 2017, driven by Mobility;
    this improvement was the main factor for the increase in Free cash flow from €714 million to €872 million

  • ROCE: average capital employed rose significantly faster than net income, primarily resulting from the acquisition of Mentor Graphics and the SGRE merger


We expect a mixed picture in our market environment in fiscal 2018, ranging from strong markets for our short-cycle businesses to unfavorable dynamics in our energy generation markets, as well as geopolitical uncertainties that may restrict investment sentiment. For fiscal 2018 we expect modest growth in revenue, net of effects from currency translation and portfolio transactions, and anticipate that orders will exceed revenue for a book-to-bill ratio above 1. We expect a profit margin of 11.0% to 12.0% for our Industrial Business and basic EPS from net income in the range of €7.20 to €7.70, both excluding severance charges.

This outlook excludes charges related to legal and regulatory matters, effects on EPS associated with minorities holding shares in
Healthineers following the planned IPO, and potential effects which may follow the introduction of a new strategic program.


Elisavet-Vasiliki Sachinidou