Earnings Release Q2 FY 2018 - Investments in digital industry making an impact
10 May 2018
"Most of our businesses, primarily our digital offerings, showed impressive performance and operationally more than offset
structural challenges in fossil power generation. By raising our guidance, we demonstrate our commitment to the company’s capability to master structural change and shape digital industry," said Joe Kaeser, President and Chief Executive Officer of Siemens AG.
Revenue was €20.1 billion, nearly unchanged from Q2 FY 2017, and orders were also strong at €22.3 billion, 2% below the high basis of comparison a year earlier which included a substantially higher volume from large orders; the book-to-bill ratio was 1.11
Strong order intake, only slightly below the high basis of comparison in Q2 FY 2017; lower volume from large orders,
particularly in Siemens Gamesa Renewable Energy (SGRE), which was formed via merger between the periods under
review, in Energy Management and in Power and Gas; orders rose clearly excluding the change in large order volume
Profit Industrial Business declined due predominantly to Power and Gas where market forces drove a €325 million reduction in profit year-over-year; continued strong performance in a majority of the other industrial businesses, most prominently in Digital Factory, which sharply increased its profit on strength in its short-cycle and product lifecycle management software businesses; Mobility surpassed the high profitability it achieved in Q2 FY2017;BuildingTechnologies and Siemens Healthineers again made strong profit contributions, but reported declines due to a €94 million gain related to amendments of pension plans for Building Technologies in Q2 FY 2017 (total effect for
Industrial Business: €138 million) and negative currency effects for Siemens Healthineers
Outside Industrial Business, Centrally managed portfolio activities (CMPA) recognized a €900 million gain related to
Siemens‘ investment in Atos SE, as a result of transferring Siemens‘ Atos shares to Siemens Pension-Trust e.V.; this was partly offset by a €154 million impairment loss related to an equity investment, also within CMPA. While costs within
Corporate items came in lower, this 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
We continue to expect geopolitical uncertainties such as trade restrictions that may affect investment sentiment.
Following the strong results achieved in the first half of fiscal 2018, we raise our outlook for basic EPS from net income to the range of €7.70 to €8.00, excluding severance charges, up from the range of €7.20 to €7.70. 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