Siemens AG raised its outlook for a second time in fiscal 2023 after revenue and orders jumped with the company’s main businesses pairing industrial products with digital solutions driving the result.
The German company now sees comparable revenue growth of 9% to 11% for the year, up from between 7% to 10%, Siemens said Wednesday, also driving a rise in expected earnings per share. After a surge in demand during the fiscal second quarter, Siemens said orders are set to normalize during the second half.
Industrial manufacturers like Siemens are benefiting from supply-chain issues improving and demand holding up well despite a darkening global outlook. The company’s order backlog rose again during the quarter to an all-time high of €105 billion ($114 billion), following a record intake in the mobility segment, which makes trains.
“We are sitting on a record high order backlog, which gives us very good visibility on fiscal 2023 and into 2024,” Chief Executive Officer Roland Busch said in an interview with Bloomberg Television. “We see a normalization of order intake, which is good as want to go back to better delivery times.”
For the second half of the fiscal year, Siemens expects revenue from its order bank alone of €30 billion.
At Siemens’s main divisions, digital industries and smart infrastructure, the picture was more mixed. While profit surged, orders at the unit making factory products and related digital services, orders fell 10%. The company still raised its profit margin outlook for digital industries to as much as 23.5%, up from as much as 22%.
At smart infrastructure, with products helping buildings reduce their carbon footprint, orders rose 9%, and Siemens also boosted expectations for revenue and returns.
“Think about the transformation we are in with regards to climate change,” said Busch. “We have to drive up efficiency and get our energy consumption down — we believe we are sitting on a supercycle with a perfect portfolio serving this wave.”
Strategic Reset
Siemens is reaping the results of a major strategic reset of its business, shedding heavy-duty equipment in favor of software-driven product lines with higher profitability levels. It has sold many of its smaller divisions, alongside spinoffs of businesses like gas turbine maker Siemens Energy AG and health-care equipment manufacturer Siemens Healthineers AG.
During the fiscal second quarter, comparable revenue rose 15% to €19.4 billion, beating analyst estimates of a €18.7 billion. Net income rose to €3.48 billion, above an analyst estimates of €3.1 billion. Siemens’ bottom line profited from an €1.59 billion accounting gain related to the partial impairment reversal on its stake in Siemens Energy.
--With assistance from Oliver Crook.
(Updates with comment from CEO in fourth paragraph)
Author: Wilfried Eckl-Dorna