Earnings Release and Financial Results Q1 FY 2020: Strong demand delivers record high for order backlog

Orders at €24.8 billion, down 2% from the strong prior-year level as sharply lower volume from large orders in Mobility more than offset increases in the majority of industrial businesses, particularly in Siemens Gamesa Renewable Energy (SGRE); revenue rose 1%, to €20.3 billion
On a comparable basis, excluding currency translation and portfolio effects, orders declined 4% and revenue was down 1%; the book-to-bill ratio was a strong 1.22 and the order backlog reached a new high at €149 billion
Adjusted EBITA Industrial Businesses declined to €1.4 billion, due mainly to a loss in SGRE and market weakness for short-cycle businesses; Adjusted EBITA margin Industrial Businesses was 7.3%, held back by €0.2 billion in severance charges, which reduced Adjusted EBITA margin Industrial Businesses by 1.0 percentage points
Net income declined 3% to €1.1 billion and included substantially better results outside Industrial Businesses compared to Q1 FY 2019; basic earnings per share (EPS) rose 6% to €1.33

We confirm our outlook for fiscal 2020. We expect global macroeconomic development to remain subdued in fiscal 2020, with risks particularly related to geopolitical and geoeconomic uncertainties. We assume a moderate decline in market volume for our short-cycle businesses. Given the foregoing, we expect the Siemens Group to again achieve moderate growth in comparable revenue, net of currency translation and portfolio effects, and a book-to-bill ratio above 1.

Digital Industries expects fiscal 2020 comparable revenue to remain level compared to the prior-year, outperforming the broader market, despite continued weakness in its most important short-cycle markets, particularly the automotive and machine tool industries. Adjusted EBITA margin is expected at 17% to 18%.

Smart Infrastructure expects to achieve moderate comparable revenue growth in fiscal 2020, driven by its longer-cycle solutions and service business, even as its short-cycle industrial products business faces headwinds from a market slowdown. Adjusted EBITA margin is expected at 10% to 11%.

Economic cycles have limited impact on the markets for Mobility, which anticipates mid-single-digit comparable revenue growth in fiscal 2020 driven by its rolling stock business, which ramped up several large rail projects toward the end of fiscal 2019. Adjusted EBITA margin is expected at 10% to 11%.

While energy markets are assumed to remain challenging with some signs of stabilization, Gas and Power expects a moderate comparable revenue growth particularly including execution on its large order backlog. Adjusted EBITA margin is expected at 2% to 5%.

As previously announced, we plan to carve out Gas and Power and to contribute our 59% stake in Siemens Gamesa Renewable Energy (SGRE) to create a new entity, Siemens Energy. For this entity, we plan a spin-off and public listing before the end of fiscal 2020, with Siemens Energy becoming part of discontinued operations prior to the spin-off. We expect this to result in substantial positive effects within discontinued operations, including a substantial gain at spin-off, which cannot yet be reliably quantified.

For our EPS guidance we assume these positive effects will offset carve-out costs and tax expenses related to the spin-off and Group-wide severance charges for the fiscal year. Taken together with our previously mentioned expectations for fiscal 2020, we expect this to result in basic earnings per share (EPS) from net income in the range from €6.30 to €7.00 compared to €6.41in fiscal 2019.

This outlook excludes charges related to legal and regulatory matters.

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After a powerful finish in fiscal 2019, the first quarter started slowly as expected. The weak performance across our energy businesses reinforces our priorities. We confirm our full-year guidance and will list Siemens Energy on

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Earnings Release and Financial Results Q1 FY 2020: Strong demand delivers record high for order backlog – focus on energy businesses

Outlook

Please read the complete Earnings Release and Financial Results:

Earnings Release Q1 FY 2020: Strong demand delivers record high for order backlog – focus on energy businesses

Joe Kaeser, President and Chief Executive Officer of Siemens AG

Contact

Wolfram Trost