News Column

Siemens AG - Good Q3 results, Challenges in Energy Sector

August 4, 2014



ENP Newswire - 04 August 2014

Release date- 01082014 - In the third quarter of fiscal 2014, Siemens posted strong results in most areas, which were affected by challenges in the Energy Sector.

Net income rose to EUR1.4 billion, from EUR1.1 billion in the prior-year-period. Corresponding earnings per share increased to EUR1.62 year-over-year from EUR1.27. Total Sectors profit rose to EUR1.7 billion, but was held back by ongoing profitability challenges within the Energy Sector. For comparison, Total Sectors profit of EUR1.3 billion one year earlier had been burdened by EUR418 million in 'Siemens 2014' charges.

Headwinds from the strong euro held back the development of orders and revenue. On an organic basis, excluding currency translation and portfolio effects, revenue rose one percent to EUR17.9 billion and orders remained level year-over-year at EUR19.4 billion. The ratio of orders to revenue (book-to-bill) was 1.08, and the company's order backlog was EUR101 billion. Free cash flow from continuing operations increased to EUR1.1 billion from EUR1.0 billion a year earlier.

'While we made good progress in most areas, the Energy Sector poses a continued challenge in the quarters to come. 'Siemens - Vision 2020' leads the way to sustainable performance improvement,' said Siemens President and CEO Joe Kaeser.

Sectors

Profit in the Energy Sector decreased to EUR405 million, on a two percent decline in revenue on a comparable basis. Results for the quarter were affected also by ongoing profitability challenges within the Sector, most notably at Power Transmission where project charges included EUR128 million in impacts related mainly to grid connections to offshore wind-farms and EUR27 million related to a high voltage direct current (HVDC) transmission project in the UK. Energy generated substantial order growth from large contract wins in all its Divisions, including a EUR1.6 billion offshore wind-farm order.

Third-quarter profit in Healthcare declined to EUR436 million, due mainly to unfavorable currency effects, particularly for the Sector's imaging and therapy systems businesses. On a comparable basis, Healthcare revenue declined one percent and orders increased two percent.

With a profit of EUR548 million, up from EUR363 million a year earlier, Industry made the largest contribution to Total Sectors profit. This profit performance reflects an improvement in Industry's short-cycle businesses. A favorable product mix more than offset adverse currency effects, lifting profit margins at both Divisions within the Sector. On a comparable basis, revenue in the Industry Sector was up three percent and orders grew five percent.

Infrastructure & Cities delivered a solid performance with a profit of EUR350 million in the third quarter, including higher earnings from all Businesses within the Sector. The Transportation & Logistics Business made the largest contribution to the Sector's profit improvement year-over-year, combining significantly higher revenue with solid execution of large rolling stock projects.

Revenue for the Sector rose eight percent on a comparable basis. Orders for Infrastructure & Cities came in well below the prior-year level, when a sharply higher volume from large orders at Transportation & Logistics included an order worth EUR3.0 billion for trains and maintenance in the UK.

Outlook

Siemens confirms its guidance for fiscal 2014. The company expects revenue on an organic basis to remain level year-over-year, and orders to exceed revenue for a book-to-bill ratio above 1. Given these developments and financial results for the first nine months, we expect basic earnings per share (Net Income) for fiscal 2014 to grow by at least 15 percent from EUR5.08 in fiscal 2013.

This outlook is based on shares outstanding of 843 million as of September 30, 2013. Furthermore, it excludes impacts related to legal and regulatory matters.

Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the fields of industry, energy and healthcare as well as providing infrastructure solutions, primarily for cities and metropolitan areas. For over 165 years, Siemens has stood for technological excellence, innovation, quality, reliability and internationality. The company is one of the world's largest providers of environmental technologies.

Around 43 percent of its total revenue stems from green products and solutions. In fiscal 2013, which ended on September 30, 2013, revenue from continuing operations totaled EUR74.4 billion and income from continuing operations EUR4.2 billion. At the end of September 2013, Siemens had around 362,000 employees worldwide on the basis of continuing operations. Further information is available on the Internet at: www.siemens.com.

This document contains statements related to our future business and financial performance and future events or developments involving Siemens 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, 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' management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens' control, affect Siemens' operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends.

These factors include in particular, but are not limited to, the matters described in Item 3: Key information - Risk factors of our most recent annual report on Form 20-F filed with the SEC, in the chapter Risks of our most recent annual report prepared in accordance with the German Commercial Code, and in the chapter Risks and opportunities of our most recent interim report.

Further information about risks and uncertainties affecting Siemens is included throughout our most recent annual and interim reports, as well as our most recent earnings release, which are available on the Siemens website, www.siemens.com, and throughout our most recent annual report on Form 20-F and in our other filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC's website, www.sec.gov.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of Siemens may vary materially from those described in the relevant forward-looking statement as being expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens 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 or may be non-GAAP financial measures. Orders and order backlog; adjusted or organic growth rates of revenue and orders; book-to-bill ratio; Total Sectors profit; return on equity (after tax), or ROE (after tax); return on capital employed (adjusted), or ROCE (adjusted); Free cash flow, or FCF; adjusted EBITDA; adjusted EBIT; adjusted EBITDA margins, earnings effects from purchase price allocation, or PPA effects; net debt and adjusted industrial net debt are or may be such non-GAAP financial measures.

hese supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently.

Definitions of these supplemental financial measures, a discussion of the most directly comparable IFRS financial measures, information regarding the usefulness of Siemens' supplemental financial measures, the limitations associated with these measures and reconciliations to the most comparable IFRS financial measures are available on Siemens' Investor Relations website at www.siemens.com/nonGAAP.

For additional information, see supplemental financial measures and the related discussion in Siemens' most recent annual report on Form 20-F, which can be found on our Investor Relations website or via the EDGAR system on the website of the United States Securities and Exchange Commission.

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.

Contact:

Mr. Alexander Becker

Siemens AG

Tel: +49 (89) 636-36558

Email: becker.alexander@siemens.com


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Source: ENP Newswire


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