Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Siemens Healthineers AG (SMMNY, Financial) achieved growth in all regions except China, with a book-to-bill ratio of 1.12.
- The company reported a 7% increase in comparable revenue, driven by strong growth in imaging, Varian, and advanced therapies.
- Adjusted EPS grew by 16%, supported by impressive margins in imaging and advanced therapies.
- Free cash flow more than doubled compared to Q4 last year, aided by improvements in inventory levels.
- Siemens Healthineers AG (SMMNY) introduced significant innovations in 2024, including the 1.5 Tesla MAGNETOM Flow and MAMMOMAT B.brilliant, contributing to market share gains.
Negative Points
- China's market posed significant headwinds, impacting growth and margins more than initially expected.
- The company anticipates a mid to high single-digit decline in China for the first half of fiscal year 2025.
- Concerns about potential tariffs and geopolitical tensions, particularly between the US and China, could impact operations.
- The diagnostics business is experiencing slower growth due to the transition from legacy systems to the Atellica franchise.
- The volume-based procurement initiative in China is impacting the growth trajectory of the diagnostics segment.
Q & A Highlights
Q: Can you elaborate on the guidance for fiscal year '25, particularly regarding imaging and the impact of China on margin expansion?
A: Jochen Schmitz, CFO, explained that the guidance reflects a cautious approach due to expected declines in China, which affects imaging margins. Initially, they anticipated 100 basis points of margin expansion, assuming China would grow. However, with China expected to decline in the first half, the margin expansion is now more conservative.
Q: How do you view the potential impact of a Trump victory in the US on tariffs, and how prepared is Siemens Healthineers for such a scenario?
A: Bernd Montag, CEO, stated that they do not expect major changes in US healthcare policies affecting demand. Siemens Healthineers is well-positioned with a twin factory setup, delivering from China to China and from the US and Europe to the US. The company has a balanced trade flow and significant operations in the US, mitigating potential tariff impacts.
Q: What are your assumptions for China in the fiscal year '25 guidance, and how conservative are these given recent order trends?
A: Jochen Schmitz noted that they expect a mid to high single-digit decline in China for the first half and flat performance in the second half. This assumption is considered prudent due to the lack of a significant trigger for a turnaround, despite potential stimulus.
Q: Can you discuss the strength in CT sales and the contribution of photon-counting CT technology?
A: Bernd Montag highlighted that the strong CT sales were driven by US demand and the adoption of photon-counting CT technology. This technology is gaining traction beyond academic centers, with applications in cardiac screening and other new uses, indicating a broadening customer base.
Q: Regarding the midterm ambition for 2025, does the double-digit adjusted EPS growth assume a recovery in China?
A: Jochen Schmitz confirmed that the midterm targets assume China will remain an attractive market in the mid to long term, contributing to growth. The diagnostics transformation is expected to continue improving margins, with further savings potential as legacy platforms are phased out.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
