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Earnings Release Q3 FY 2018 - Excellent order growth highlights successful third quarter

02 August 2018

 "Our global team delivered a strong quarter, highlighted by outstanding order intake, outperforming the market. We diligently address our opportunities and challenges going forward," said Joe Kaeser, President and Chief Executive Officer of Siemens AG.

  • On a comparable basis, excluding currency translation and portfolio effects, orders rose 21% and revenue was level with the prior-year period

  •  On a nominal basis, orders climbed 16% to €22.8 billion driven by a higher volume from large orders, while revenue came
    in at €20.5 billion, 4% lower than the prior-year quarter due primarily to currency translation effects; the book-to-bill ratio as 1.11

  • Industrial Business profit was up 2% at €2.2 billion and Industrial Business profit margin was 10.7%; excellent performance by Digital Factory and improvements in many Divisions partly offset by a sharp decrease in profit and profitability at Power and Gas

  • Net income of €1.2 billion was held back by substantially higher income tax rate compared to Q3 FY 2017, which also
    benefited from positive effects in Centrally managed portfolio activities; basic earnings per share (EPS) of €1.36 compared to €1.67 in Q3 FY 2017

  • Strong order growth due to a higher volume from large orders in Siemens Gamesa Renewable Energy (SGRE), Power and Gas and Mobility; in addition, higher order intake in nearly all other industrial businesses, led by Digital Factory

  • Revenue down due to negative currency translation effects; on a comparable basis, revenue was flat with increases in the majority of industrial businesses offset by significant declines in Power and Gas and SGRE

  • The resulting strong book-to-bill ratio of 1.11 lifted the order backlog to a record high of €132 billion

  •  Negative currency translation effects took five percentage points from order growth and four percentage points from
    revenue development; portfolio transactions had a minimal effect on volume development year-over-year

  • Profit Industrial Business: another excellent quarter for Digital Factory, which delivered both the largest profit contribution
    and highest profit increase among the industrial businesses, along with a strong performance in other industrial businesses; in contrast, profit in Power and Gas fell sharply due to ongoing adverse market conditions; overall profit and
    profitability impacted by negative currency effects particularly at Siemens Healthineers, Energy Management and Process Industries and Drives

  • Income from continuing operations impacted by substantially higher income tax rate while Q3 FY 2017 benefited from
    positive effects within Centrally managed portfolio activities (CMPA)

  • Net income benefited from a €53 million pre-tax effect within discontinued operations, arising from release of a provision
    related to former Communications activities

  • ROCE decreased due to lower net income which more than offset the positive effect of a slight decline in average capital employed

Outlook

 We continue to expect basic EPS from net income in the range of €7.70 to €8.00, excluding severance charges. Furthermore we confirm our expectation of modest growth in revenue, net of effects from currency translation and portfolio transactions, and continue to
anticipate that orders will exceed revenue for a book-to-bill ratio above 1 for the full fiscal year. We continue to expect a profit margin of 11.0% to 12.0% for our Industrial Business also excluding severance charges.

This outlook excludes charges related to legal and regulatory matters and potential effects which may follow the introduction of a new strategic program.


Elisavet-Vasiliki Sachinidou 

 elisavet.sachinidou@siemens.com