- 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.
According to the company’s website press release on February 7, 2023:
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.”
Outlook
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.
