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Earnings
Release Q1 FY 2023: Strong underlying performance
notwithstanding charges at SGRE – outlook for fiscal year 2023 adjusted
Despite
the subdued overall economic development, Siemens Energy’s market environment
remained favorable. During the quarter, Grid Technologies (GT) was awarded the largest
offshore grid connection order in Siemens Energy's history. The platforms will
connect several offshore wind farms in the (German) North Sea to the onshore
grid.
Siemens
Energy delivered strong order and revenue growth and better than expected cash
flow. A strongly improved operational performance at Gas Services (GS), GT, and
Transformation of Industry (TI) was more than offset by charges of €0.5bn at
Siemens Gamesa Renewable Energy (SGRE). During an evaluation of the installed
fleet, SGRE detected a negative development of failure rates in specific
components resulting in higher warranty and service maintenance cost assumptions.
Orders
continued to be very strong. Comparable growth (excluding currency translation
and portfolio effects) was 49.2% despite a high basis of comparison, resulting
in orders of €12.7bn, supported by large orders especially at GT. The Book-to-bill
ratio (ratio of orders to revenue) was 1.80 and the order backlog rose to
€98.8bn despite material negative currency translation effects.
Revenue came
in at €7.1bn reflecting a 16.0% increase on a comparable basis. All segments
contributed to this growth.
Siemens
Energy’s Profit before Special items was negative €282m (Q1 FY 2022: negative €69m)
due to the charges at SGRE. GS and GT reported sharp improvements year-over-year
and TI delivered a positive result. Special items were negative with €103m (Q1
FY 2022: positive €6m) mainly driven by restructuring costs at SGRE. As a
result, Profit for Siemens Energy was negative €384m (Q1 FY 2022: negative €64m).
Accordingly,
Siemens Energy reported a Net loss of €598m (Q1 FY 2022: Net loss €246m).
Corresponding basic earnings per share (EPS) were negative €0.60 (Q1 FY 2022:
negative €0.18).
Free cash
flow pre tax was negative with
€58m (Q1 FY 2022: negative €69m), mainly driven by cash outflows at SGRE.
Overall, the development was better than expected, supported by advance
payments from customers in relation to the strong order development.
Due to the
aforementioned charges at SGRE, Siemens Energy had to adjust its outlook for
fiscal year 2023. Management now expects Siemens Energy Group’s Profit margin before
Special items between 1% and 3% and Net loss of Siemens Energy Group to be on
prior fiscal year’s reported level. Due to the better than expected cash flow
development during the quarter, management now expects Free cash flow pre tax
for fiscal year 2023 to be positive.
Christian Bruch, President and CEO of Siemens Energy AG:
“Our
order growth demonstrates that we have the right portfolio to capitalize on the
energy transition. Notwithstanding the charges at Siemens Gamesa, Jochen
Eickholt and his team are making progress in improving the sustainability of
the company. The intended delisting of Siemens Gamesa will further support the
team to focus on solving the operational problems and the turnaround.”
Despite
the subdued overall economic development, Siemens Energy’s market environment
remained favorable. During the quarter, Grid Technologies (GT) was awarded the largest
offshore grid connection order in Siemens Energy's history. The platforms will
connect several offshore wind farms in the (German) North Sea to the onshore
grid.
Siemens
Energy delivered strong order and revenue growth and better than expected cash
flow. A strongly improved operational performance at Gas Services (GS), GT, and
Transformation of Industry (TI) was more than offset by charges of €0.5bn at
Siemens Gamesa Renewable Energy (SGRE). During an evaluation of the installed
fleet, SGRE detected a negative development of failure rates in specific
components resulting in higher warranty and service maintenance cost assumptions.
Orders
continued to be very strong. Comparable growth (excluding currency translation
and portfolio effects) was 49.2% despite a high basis of comparison, resulting
in orders of €12.7bn, supported by large orders especially at GT. The Book-to-bill
ratio (ratio of orders to revenue) was 1.80 and the order backlog rose to
€98.8bn despite material negative currency translation effects.
Revenue came
in at €7.1bn reflecting a 16.0% increase on a comparable basis. All segments
contributed to this growth.
Siemens
Energy’s Profit before Special items was negative €282m (Q1 FY 2022: negative €69m)
due to the charges at SGRE. GS and GT reported sharp improvements year-over-year
and TI delivered a positive result. Special items were negative with €103m (Q1
FY 2022: positive €6m) mainly driven by restructuring costs at SGRE. As a
result, Profit for Siemens Energy was negative €384m (Q1 FY 2022: negative €64m).
Accordingly,
Siemens Energy reported a Net loss of €598m (Q1 FY 2022: Net loss €246m).
Corresponding basic earnings per share (EPS) were negative €0.60 (Q1 FY 2022:
negative €0.18).
Free cash
flow pre tax was negative with
€58m (Q1 FY 2022: negative €69m), mainly driven by cash outflows at SGRE.
Overall, the development was better than expected, supported by advance
payments from customers in relation to the strong order development.
Due to the
aforementioned charges at SGRE, Siemens Energy had to adjust its outlook for
fiscal year 2023. Management now expects Siemens Energy Group’s Profit margin before
Special items between 1% and 3% and Net loss of Siemens Energy Group to be on
prior fiscal year’s reported level. Due to the better than expected cash flow
development during the quarter, management now expects Free cash flow pre tax
for fiscal year 2023 to be positive.
Christian Bruch, President and CEO of Siemens Energy AG:
“Our
order growth demonstrates that we have the right portfolio to capitalize on the
energy transition. Notwithstanding the charges at Siemens Gamesa, Jochen
Eickholt and his team are making progress in improving the sustainability of
the company. The intended delisting of Siemens Gamesa will further support the
team to focus on solving the operational problems and the turnaround.”
Assumptions for the segments GS, GT and TI in respect
to revenue growth and Profit margins before Special items remain unchanged and
we continue to expect for Siemens Energy comparable revenue growth (excluding
currency translation and portfolio effects) in fiscal year 2023 in a range of
3% to 7% (unchanged).
Due to the aforementioned charges on the result, SGRE’s
management no longer expects SGRE’s profitability to be in line with its
business plan for fiscal year 2023. Accordingly, we had to adjust our outlook
for Siemens Energy for fiscal year 2023.
We now expect Siemens Energy Group’s Profit margin
before Special items between 1% and 3% (previously in a range of 2% to 4%) and,
accordingly, Net loss of Siemens Energy Group to be on prior fiscal year’s reported
level (previously a sharp reduction of Net loss compared to fiscal year 2022).
Due to the better than expected cash flow development during
the quarter, we now expect Free cash flow pre tax for fiscal year 2023 to be
positive (previously in a negative range of low- to mid-triple-digit million).
The outlook for
Siemens Energy assumes no major negative financial impacts from COVID-19 or
other pandemic related events, no further deterioration in the supply chain and
raw material cost environment, and excludes charges related to legal and
regulatory matters.
Notes and forward-looking statements
This document
contains statements related to our future business and financial performance,
and future events or developments involving Siemens Energy that may constitute
forward-looking statements. These statements may be identified by words such as
“expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,” “seek,”
“estimate,” “will,” “project,” or words of similar meaning. We may also make
forward-looking statements in other reports, prospectuses, in presentations, in
material delivered to shareholders, and in press releases. In addition, our
representatives may from time to time make oral forward-looking statements.
Such statements are based on the current expectations and certain assumptions
of Siemens Energy´s management, of which many are beyond Siemens Energy´s
control. These are subject to a number of risks, uncertainties, and other
factors, including, but not limited to, those described in disclosures, in
particular in the chapter “Report on expected developments and associated
material opportunities and risks” in the Annual Report. Should one or more of
these risks or uncertainties materialize, should acts of force majeure, such as
pandemics, occur, or should underlying expectations including future events
occur at a later date or not at all, or should assumptions not be met, Siemens
Energy´s actual results, performance, or achievements may (negatively or
positively) vary materially from those described explicitly or implicitly in
the relevant forward-looking statement. Siemens Energy neither intends, nor
assumes any obligation, to update or revise these forward-looking statements in
light of developments which differ from those anticipated. This document
includes supplemental financial measures – that are not clearly defined in the
applicable financial reporting framework – and that are or may be alternative
performance measures (non-GAAP-measures). These supplemental financial measures
should not be viewed in isolation or as alternatives to measures of Siemens
Energy´s net assets and financial position or results of operations as
presented in accordance with the applicable financial reporting framework in
its consolidated financial statements. Other companies that report or describe
similarly titled alternative performance measures may calculate them
differently. Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and percentages may
not precisely reflect the absolute figures.
Siemens Energy is one of the world’s leading energy technology companies. The company works with its customers and partners on energy systems for the future, thus supporting the transition to a more sustainable world. With its portfolio of products, solutions and services, Siemens Energy covers almost the entire energy value chain – from power generation and transmission to storage. The portfolio includes conventional and renewable energy technology, such as gas and steam turbines, hybrid power plants operated with hydrogen, and power generators and transformers. More than 50 percent of the portfolio has already been decarbonized. A majority stake in the listed company Siemens Gamesa Renewable Energy (SGRE) makes Siemens Energy a global market leader for renewable energies. An estimated one-sixth of the electricity generated worldwide is based on technologies from Siemens Energy. Siemens Energy employs around 92,000 people worldwide in more than 90 countries and generated revenue of €29 billion in fiscal year 2022.