Siemens made significant progress as a focused technology company in the third quarter.
The company leveraged growth opportunities in many key markets despite a continuing complex macroeconomic environment influenced by economic sanctions on Russia, high inflation and effects associated with the coronavirus pandemic. In addition, Siemens continued to avoid larger disruptions due to supply chain risks associated with electronics components, raw materials and logistics.
Siemens continues to expect profitable growth of its Industrial Business to drive basic earnings per share from net income before purchase price allocation accounting (EPS pre PPA). Following the EUR2.7 billion non-cash impairment of the company's stake in Siemens Energy AG in the third quarter of the fiscal year, the guidance is adjusted to include the corresponding earnings impact of EUR3.37 per share, resulting in a range for EPS pre PPA of EUR5.33 to EUR5.73. This range represents Siemens' original guidance for EPS pre PPA of EUR8.70 to EUR9.10, excluding this impairment.
'We captured significant opportunities in a market environment with ongoing high demand. Our strong top line momentum continued, with a comparable order growth of 20 percent since the beginning of fiscal 2022. This shows: Our business is attractive and grew once again. We have the right offerings and the right strategy to be successful even in uncertain times,' said Roland Busch, President and Chief Executive Officer of Siemens AG. 'We made significant progress as a focused technology company in the third quarter with the launch of our open digital business platform, Siemens Xcelerator, accelerating the digital transformation of our customers. We also acquired Brightly Software, an outstanding software-as-a-service player in the building space, which perfectly complements our leading position in smart buildings.'
'Our continued top line momentum translated into a record, high-quality and high-quantity order backlog of EUR99 billion. We again achieved outstanding Free cash flow of EUR2.3 billion, which further underscored our financial strength. In addition, we consistently and successfully implemented our portfolio optimization and sharply accelerated our share buyback program,' said Ralf P. Thomas, Chief Financial Officer of Siemens AG.
Solid execution - outstanding Free cash flow
In Q3, Siemens increased revenue 4 percent on a comparable basis - that is, excluding currency translation and portfolio effects - to EUR17.9 billion (Q3 2021: EUR16.1 billion). Orders grew 1 percent on a comparable basis to EUR22.0 billion (Q3 2021: EUR20.5 billion) and 20 percent on a comparable basis since the start of the fiscal year to EUR67.2 billion (Q1-Q3 2021: EUR52.3 billion). At 1.23, the book-to-bill ratio was again at a high level. The order backlog totaled EUR99 billion - a new record and of a high quality.
Profit Industrial Business climbed 27 percent to EUR2.9 billion (Q3 2021: EUR2.3 billion), including a gain of EUR739 million from the sale of Yunex Traffic. The profit margin at the Industrial Business improved to 17.0 percent (Q3 2021: 14.9 percent). The net loss totaled EUR1.5 billion (net income in Q3 2021: a positive EUR1.5 billion). This decline was due to a EUR2.7 billion nontax-deductible impairment of the stake in Siemens Energy and Russia-related impacts totaling EUR0.6 billion. Corresponding basic earnings per share before the effects of purchase price allocation accounting were a negative EUR1.85 (Q3 2021: a positive EUR1.89). Excluding the burden relating to the impairment of the stake in Siemens Energy, they totaled a positive EUR1.52.
At EUR2.3 billion, Free cash flow all-in from continuing and discontinued operations for the Siemens Group again reached an excellent level (Q3 2021: EUR2.3 billion), with the Industrial Business posting strong Free cash flow of EUR2.5 billion (Q3 2021: EUR2.4 billion). As a result, the strength of Siemens' internal financing was also demonstrated once again in Q3.
Strong growth at Digital Industries and Smart Infrastructure
At Digital Industries, orders increased by a total of 32 percent on a comparable basis across all businesses and regions to EUR6.5 billion due to ongoing growth momentum in key market segments. Revenue also rose by a total of 12 percent on a comparable basis in all business areas and regions to EUR4.9 billion, with the strongest growth contributions coming from the motion control and factory automation businesses. Profitability was held back primarily by shortages for high-margin electronics products and by lower revenue in the product lifecycle management business and higher expenses related to cloud-based activities, including the impact of the transition of parts of the business to software-as-a-service.
At Smart Infrastructure, orders increased 26 percent on a comparable basis to EUR5.5 billion. Growth was generated across all businesses and in all three reporting regions, with a particularly strong contribution from the U.S., driven primarily by continuing strong demand for data centers. Revenue increased 10 percent on a comparable basis to EUR4.4 billion across all businesses, with the largest contribution from the electrical products business. On a geographic basis, growth was driven by the Americas and Europe, while revenue in China declined on a comparable basis due to COVID-19-related lockdowns. Profit surged 31 percent to EUR562 million (Q3 2021: EUR428 million). All businesses contributed to this strong performance, which was mainly due to higher revenue and greater capacity utilization as well as cost reductions achieved through the execution of the previously announced competitiveness program. The profit margin increased to 12.9 percent (Q3 2021: 11.4 percent).
Mobility won orders of EUR2.8 billion (Q3 2021: EUR5.1 billion), whereby order intake in the prior-year quarter had been extraordinarily high due to a major order of EUR2.8 billion in the Americas. In Q3 2022, revenue rose 4 percent on a comparable basis to EUR2.5 billion (Q3 2021: EUR2.3 billion), while profit of EUR704 million benefited primarily from a EUR739 million gain from the sale of Yunex. The profit margin climbed to 28.7 percent.
Notes and forward-looking statements
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 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' management, of which many are beyond Siemens' control. These are subject to a number of risks, uncertainties and 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 Combined Management Report of the Siemens Report (siemens.com/siemensreport), and in the Interim Group Management Report of the Half-year Financial Report (provided that it is already available for the current reporting year), which should be read in conjunction with the Combined Management Report. Should one or more of these risks or uncertainties materialize, should decisions, assessments or requirements of regulatory authorities deviate from our expectations, should events of force majeure, such as pandemics, unrest or acts of war, occur or should underlying expectations including future events occur at a later date or not at all or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement.
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