Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Siemens AG (SIEGY, Financial) reported a strong operational performance with a record high free cash flow of EUR 9.5 billion for the group.
- The company achieved a record high earnings per share pre-PPA, excluding Siemens Energy, of EUR 11.45, up 6% from the previous year.
- Smart Infrastructure grew by 9% and achieved a record profitability of 17.3%, exceeding this year's guidance.
- The data center business revenue grew more than 50%, now exceeding EUR 2 billion, and clearly winning market share.
- Siemens AG (SIEGY) announced a dividend proposal of EUR 5.20, up by EUR 0.50, reflecting a strong commitment to shareholder returns.
Negative Points
- Digital Industries revenue declined by 8% on a comparable basis due to challenging conditions for the automation business.
- The automation business faced material headwinds, with revenue down 26% against a strong prior year quarter.
- Economic activity remained muted, with weak investment sentiment in core industries such as automotive and machine building.
- The company anticipates a slow start into fiscal 2025, with orders expected to be on level with the prior year due to continued destocking in automation.
- Siemens AG (SIEGY) faces ongoing geopolitical tensions and macroeconomic uncertainties, impacting global trade and production.
Q & A Highlights
Q: Can you elaborate on the digital industries revenue growth outlook for 2025 and what factors influence the high and low ends of the revenue guidance?
A: Ralf Thomas, CFO, explained that the guidance range reflects uncertainties such as the timing of China's destocking and the economic situation in Germany. The company expects normalization in China by February or March 2025. Despite challenges, there is a strong demand for digitalization and automation, driven by regulatory pressures and labor shortages, which should support growth.
Q: Could you explain the surprise in the DI margin from the guided 13% to the achieved 16%? What are the expectations for DI margins in 2025?
A: Ralf Thomas noted that the higher-than-expected DI margin was due to strong software orders, particularly in EDA. For 2025, the margin is expected to improve in the second half as productivity measures take effect. The first half may see margins below the annual guidance due to lower capacity utilization and investment in workforce adjustments.
Q: Can you provide more details on the growth and competitive dynamics in the data center business within Smart Infrastructure?
A: Roland Busch, CEO, stated that the data center business grew by 50% to EUR2 billion, driven by strong demand from hyperscalers. Siemens' competitive edge lies in its advanced switching technology, global supply capabilities, and reliable delivery, which are crucial for data center clients.
Q: How is Siemens managing supply chain issues in the Mobility segment, especially compared to peers like Alstom and Stadler?
A: Roland Busch mentioned that Siemens has not faced significant supply chain issues post-COVID and has a strong backlog of EUR48 billion. The company focuses on productivity and flawless execution, which is reflected in its strong free cash flow and operational performance.
Q: What is the impact of the ONE Tech Company program on innovation spending, and how is it balanced with customer-focused product innovation?
A: Ralf Thomas explained that the ONE Tech Company program involves significant investment in foundational technologies to accelerate digital transformation. This includes internal process improvements and AI adoption. The innovation spending is managed to ensure it supports both internal efficiency and customer-focused product development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
