CEO Morning Brief

Siemens Raises Full Year Outlook After 2Q Sales Beats Forecasts

Publish date: Thu, 18 May 2023, 08:40 AM
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TheEdge CEO Morning Brief
Siemens raises full year outlook after 2Q sales beats forecasts

(May 17): Siemens raised its full year sales and profit guidance on Wednesday (May 17) after the German engineering and technology group beat sales forecasts during its second quarter (2Q).

The maker of products ranging from trains and industrial software was in confident mood, boosted by its enormous order book which continued to expand, and a further easing in supply chain bottlenecks.

Continued strong demand also helped its factory automation and smart buildings divisions to their highest ever quarterly profit, while the mobility business, which encompasses trains, rolling stock and transport systems, returned to profit after last year's hit from the group's withdrawal from Russia.

"We had a very successful first half-year," chief executive Roland Busch told reporters.

"We now want to further leverage our exceptional order backlog and execution strength. This means that — despite a volatile environment — we’re very confident about the second half-year."

The company now expects comparable revenue growth of 9% to 11% in the 12 months to the end of September, up from its previous outlook for an increase of 7% to 10%.

Siemens also expects to increase its underlying basic earnings per share to a range of €9.60 (RM47.13) to €9.90, up from the €8.90 to €9.40 it forecast in February.

The company had already raised its full-year outlook in February, citing strong demand and its massive order backlog, which increased to €105 billion in 2Q.

The raised guidance came after Siemens reported its 2Q revenue jumped by 14% to €19.42 billion. Analysts in a company-compiled poll had expected €18.59 billion. Industrial profit in the three months to the end of March rose 47% to €2.61 billion, missing forecasts for €2.7 billion.

The results of Siemens, whose sensors, controllers and software are used in factories, transport systems and buildings, are seen as indicators for the health of the broader industrial economy.

The results underline the recent upward trend in global industry reflected in results by rivals including ABB and Alstom.

Siemens's net income almost tripled to €3.55 billion, helped by the company booking a non cash gain of €1.59 billion from reversing an impairment charge related to its investment in Siemens Energy.

The company would also likely announce later this year its plans to invest its remaining 31.9% stake in Siemens Energy.

Siemens remained committed to exiting completely, and its pension fund had already sold its 9.9% stake, CFO Ralf Thomas told reporters.

Siemens shares were 2.1% higher in early trading at €152.56.

"This is a straightforward, operational beat and raise, driving further upgrades that reflect broad-based strong momentum in demand and execution," said JP Morgan analyst Andrew Wilson. "We expect the shares to outperform today."

Source: TheEdge - 18 May 2023

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