Siemens started fiscal 2023 (to Dec. 31, 2022) with a strong performance and maintained its continuing growth momentum with very good results in Q1. The company leveraged growth opportunities in its key markets despite a still complex macroeconomic environment. Following the strong start in fiscal 2023, Siemens raises its outlook for fiscal 2023. For the Siemens Group, the company now expects comparable revenue growth, net of currency translation and portfolio effects, in the range of 7-10% (previously expected at 6-9%) and continues to expect a book-to-bill ratio above 1.
Furthermore, Siemens now expects this profitable growth of its industrial businesses to drive an increase in basic EPS from net income before purchase price allocation accounting (EPS pre PPA) to a range of €8.90 to €9.40 (previously expected at €8.70 to €9.20) in fiscal 2023.
“We achieved our all-time strongest start to a new fiscal year, with €2.7 billion in profit in our Industrial Business. The impressive growth momentum of our business in the first quarter once again highlights the great trust that our customers place in the relevance of our portfolio and our ability to perform. Our outstanding order backlog in terms of quality and quantity, together with the strong execution capabilities throughout Team Siemens, provide confidence for raising our outlook for fiscal 2023,” said Roland Busch, president and Chief Executive Officer of Siemens AG. “In the first quarter of fiscal 2023, we were able to seamlessly continue our strong operational performance from fiscal 2022.
Digital Industries and Smart Infrastructure, in particular, achieved excellent results for both top and bottom line. With full order books and a temporary and deliberate build-up of critical inventories, we are well prepared for further profitable growth in the upcoming quarters. Accordingly, we raise our revenue and earnings targets for fiscal 2023,” said Ralf P. Thomas, Chief Financial Officer of Siemens AG.
Profit Industrial Business sets new first-quarter record
In Q1 2023, Siemens increased revenue on a comparable basis 8% to €18.1 billion (Q1 2022: €16.5 billion).
At €22.6 billion, orders were at a very high level (Q1 2022: €24.2 billion). The prior-year figure included an extraordinarily high order volume at Digital Industries and Mobility.
The book-to-bill ratio was a robust 1.25, whereby all businesses were considerably above 1. At €102 billion, the order backlog was at an excellent level and of high quality despite negative currency translation effects of €4 billion.
Profit Industrial Business totaled €2.7 billion, an increase of 9% and a new record for the first quarter of a fiscal year (Q1 2022: €2.5 billion).
At 15.6%, the profit margin of the Industrial Business was at about the same high level as in the prior-year quarter (Q1 2022: 15.7%).
Net income reached €1.6 billion (Q1 2022: €1.8 billion). Net income in Q1 2022 had included a positive effect of €0.3 billion (pretax) related to the investment in Fluence Energy following its initial public offering.
Corresponding basic earnings per share before purchase price allocation accounting were €2.08 (Q1 2022: €2.24). Free cash flow all-in at Group level from continuing and discontinued operations reached €86 million (Q1 2022: €1.1 billion).
The Industrial Business generated free cash flow of €0.4 billion (Q1 2022: €1.4 billion). The decline in both figures was driven primarily by higher trade receivables and temporarily increased inventories. Due to Siemens’ significant growth momentum, both free cash flow all-in and free cash flow in the Industrial Business have been weaker to date and will recover considerably in the further course of fiscal 2023.
Strong performance at Digital Industries and Smart Infrastructure
Revenue at Digital Industries increased by a total of 15% on a comparable basis to €5.1 billion, with the strongest contribution coming from the automation businesses. Orders declined 13% on a comparable basis to €6.3 billion and were below the extraordinarily high level of Q1 2022. However, orders showed sequential growth compared to Q4 fiscal 2022.
Profit climbed 22% to €1.2 billion, while the profit margin totaled 22.5%. Profit and profitability rose in all automation businesses, supported by higher capacity utilization and a more favorable product mix with improved availability of components for high-margin products.
At Smart Infrastructure, orders rose 16% on a comparable basis to €6.0 billion. All business areas contributed to this growth, in particular, the electrification business due to a number of larger contract wins from the semiconductor industry, among others. Revenue grew 15% on a comparable basis to €4.6 billion.
Profit climbed 47% to €704 million. The profit margin reached 15.3% (Q1 2022: 12.6%), Smart Infrastructure’s best quarterly profit margin to date.
Mobility increased its revenue 7% on a comparable basis to €2.4 billion. Orders, on the other hand, were down 42%on a comparable basis to €3.0 billion. In Q1 2022, Mobility had scored a number of large contract wins and recorded its largest-ever quarterly order intake.
While profit declined 13% to €195 million, the profit margin totaled 8.0%. The effects of supplier delays in delivering materials and components and of a less favorable product mix were largely offset by positive effects from the sale of previously written-down inventories.
Guidance raised
Following the strong start in fiscal 2023, Siemens raises its outlook for fiscal 2023. For the Siemens Group, the company now expects comparable revenue growth, net of currency translation and portfolio effects, in the range of 7-10% (previously expected at 6-9%) and continues to expect a book-to-bill ratio above 1. Digital Industries now expects for fiscal 2023 to achieve comparable revenue growth of 12-15% (previously expected at 10-13%). The profit margin is now expected to be 20-22% (previously expected at 19-22%). Smart Infrastructure now expects for fiscal 2023 comparable revenue growth of 9-12% (previously expected at 8-11%).
The profit margin is now expected to be 13.5-14.5% (previously expected at 13-14%). Mobility continues to expect for fiscal 2023 comparable revenue growth of 6-9% and a profit margin in the range of 8-10%.
Siemens now expects this profitable growth of its industrial businesses to drive an increase in basic EPS from net income before purchase price allocation accounting (EPS pre PPA) to a range of €8.90 to €9.40 (previously expected at €8.70 to €9.20) in fiscal 2023.
This outlook excludes burdens from legal and regulatory matters and material impairments.
About Siemens
Siemens AG (Berlin and Munich) is a technology company focused on industry, infrastructure, transport, and healthcare. From more resource-efficient factories, resilient supply chains, and smarter buildings and grids, to cleaner and more comfortable transportation as well as advanced healthcare, the company creates technology with purpose adding real value for customers. By combining the real and the digital worlds, Siemens empowers its customers to transform their industries and markets, helping them to transform the everyday for billions of people. Siemens also owns a majority stake in the publicly listed company Siemens Healthineers, a globally leading medical technology provider shaping the future of healthcare.
In addition, Siemens holds a minority stake in Siemens Energy, a global leader in the transmission and generation of electrical power. In fiscal 2022, which ended on Sept. 30, 2022, the Siemens Group generated revenue of €72.0 billion and net income of €4.4 billion.
As of Sept. 30, 2022, the company had around 311,000 employees worldwide.
