Siemens Earnings Slip in Third Quarter

FRANKFURT, Germany — Siemens released its third-quarter results for fiscal year 2019 on August 1, 2019.

Despite a significantly weaker environment in our key markets, we confirm our outlook for the year. As indicated already quite some time ago, geopolitics and geoeconomics are harming an otherwise positive investment sentiment. A robust mobility sector and stringent project execution will help us make good on our promises for the year,« said Joe Kaeser, President and Chief Executive Officer of Siemens AG. 

  • Orders grew 8%, to €24.5 billion, and revenue rose 4%, to €21.3 billion, for a strong book-to-bill ratio of 1.15 and record high order backlog of €144 billion 
  • On a comparable basis, excluding currency translation and portfolio effects, orders increased 6% and revenue was up 2% compared to Q3 FY 2018 
  • Adjusted EBITA Industrial Businesses declined to €1.9 billion, due mainly to decreases in Digital Industries and Gas and Power; Industrial Businesses Adjusted EBITA margin was 9.6%, held back by severance charges which took 0.3 percentage points 
  • Net income of €1.1 billion included substantially better results outside Industrial Businesses compared to Q3 FY 2018; basic earnings per share (EPS) of €1.28 was burdened by severance charges amounting to €0.09

Beginning with Q3 FY 2019, Siemens reports financial results according to the new company structure as described in the Annual Report for fiscal 2018. Prior-period amounts are presented on a comparable basis.

(A detailed report can be found here.)

  • Another quarter of very strong order intake; increases in the majority of industrial businesses, led by sharp growth in Siemens Gamesa Renewable Energy (SGRE) which recorded among others two orders for offshore wind-farms including service in Taiwan totaling €2.3 billion; in addition, significant order growth in Siemens Healthineers and in Mobility, which recorded a €1.2 billion contract for high-speed trains including maintenance in Russia; significant decrease in Gas and Power 
  • Revenue growth driven by a substantial increase in SGRE and clear growth in Siemens Healthineers; moderate decline in Gas and Power 
  • Strong book-to-bill ratio of 1.15; order backlog at a record high of €144 billion 
  • Currency translation effects added one percentage point each to order and revenue growth; portfolio effects had a minimal effect on volume growth year-over-year 
  • Higher Adjusted EBITA in Siemens Healthineers and Mobility; Digital Industries made the largest contribution to Adjusted EBITA Industrial Businesses although adverse market conditions for its short-cycle businesses caused a significant margin deterioration; lower Adjusted EBITA in Gas and Power, which in Q3 FY 2018 benefited from a divestment gain 
  • Strong improvement outside Industrial Businesses included better results from Corporate Treasury activities 
  • Net income benefited from a lower income tax rate year-overyear; Q3 FY 2018 included €46 million in income from discontinued operations primarily related to former Communications activities 
  • Decrease in Free cash flow from Industrial Businesses, to €977 million from €1.764 billion in Q3 FY 2018, was primarily driven by Mobility; in Q3 FY 2018 Free cash flow outside Industrial Businesses included a significant contribution to pension assets 
  • Provisions for pensions and similar obligations as of June 30, 2019: €9.5 billion (March 31, 2019: €9.4 billion) 
  • ROCE declined due to a combination of higher average capital employed and lower net income

Digital Industries

  • Order and revenue growth in the software and process automation businesses were more than offset by declines in the short-cycle factory automation and motion control businesses due particularly to further deterioration in demand from the automotive and machine building industries 
  • On a geographic basis, lower orders and revenue in the regions Europe, C.I.S., Africa, Middle East (Europe/CAME) and the Americas more than offset increases in Asia, Australia, which were due mainly to sharp growth in the software business, particularly including in China 
  • Adjusted EBITA decline was due mainly to lower revenue in the high-margin short-cycle businesses and a negative effect from the revaluation of the stake in Bentley Systems, Inc.; software business impacted by higher expenses year-over-year for new cloud-based offerings

Smart Infrastructure

  • Order growth in the solutions and services business and the systems and software business driven by higher volume from larger contracts; product business nearly on prior-year level 
  • Revenue rose in all three businesses; growth in the product business was due to low voltage products 
  • On a geographic basis, volume rose in all reporting regions, most notably in the Americas 
  • Adjusted EBITA held back by ongoing expenses related to expansion of smart building solutions and a less favorable business mix

Gas and Power

  • Lower volume from large orders; Q3 FY 2018 included two large contract wins for combined-cycle power plants including service in Israel and in the U.K. totaling €0.8 billion 
  • Revenue down in the new unit business following weak order entry in prior periods; on a geographic basis, a significant increase in the Americas was more than offset by significant decreases in the other two reporting regions 
  • Continuing solid contribution to Adjusted EBITA from the service business; Q3 FY 2018 included a gain of €80 million from a divestment; profitability continues to be burdened by price declines and low capacity utilization


  • Orders rose on higher volume from large orders, most notably a €1.2 billion contract for high-speed trains including maintenance in Russia and a €0.2 billion order for trams in Germany; Q3 FY 2018 included a €0.7 billion rail infrastructure order, including service in Norway 
  • Revenue close to prior-year level, despite unfavorable timing effects related to execution of large rail projects 
  • Adjusted EBITA rose on increases in the majority of businesses, particularly including a strong contribution from the service business

Siemens Healthineers

  • Volume up in all businesses, led by the imaging business; on a geographic basis, volume increases in all three regions, including substantial order growth in the U.S. and significant revenue growth in China 
  • Higher Adjusted EBITA year-over-year on increases in the imaging and advanced therapies businesses, partly offset by a decline in the diagnostics business which included increases in Atellica Solution ramp-up costs

Siemens Gamesa Renewable Energy

  • Sharp order growth year-over-year due to a higher volume from large orders, including two large orders for offshore wind-farms including service in Taiwan totaling €2.3 billion and several large orders in the onshore business mainly in the U.S.; Q3 FY 2018 included a €1.3 billion order for an offshore wind-farm including service in the U.K. 
  • Revenue up in all businesses, driven by sharp growth in the offshore business; on a geographic basis, revenue growth mainly in Europe/CAME 
  • Adjusted EBITA margin held back by price declines, lower profitability in the onshore business and higher integration costs year-over-year

Financial Services

  • Q3 FY 2018 benefited from a gain on the sale of a stake in an equity investment, which accounted for the difference in income before income taxes year-over-year 
  • Increase in total assets since the end of fiscal 2018 included positive currency translation effects

Portfolio Companies

  • Portfolio Companies consist largely of businesses formerly included in the Divisions Process Industries and Drives and Energy Management, along with certain other activities that were formerly reported in Centrally managed portfolio activities (Siemens Logistics business and equity investments including Valeo Siemens eAutomotive, Primetals, EthosEnergy and Voith Hydro) 
  • Orders lower in competitive market environments; Q3 FY 2018 included higher contributions from the process solutions business and from the wind power components business 
  • Revenue rose in the majority of businesses, most strongly in wind power components  Adjusted EBITA also rose in the majority of businesses; this was partially offset by declines in the equity investments 
  • Volatile results from equity investments are expected in coming quarters

Reconciliation to Consolidated Financial Statements

  • Beginning with Q3 FY 2019, Corporate items includes certain activities previously reported in Centrally managed portfolio activities; these include the major asset retirement obligations related to Hanau and Karlstein facilities and the Olkiluoto project 
  • Corporate items were influenced by a number of factors, including lower severance charges of €35 million (€53 million in Q3 FY 2018) 
  • Eliminations, Corporate Treasury and other reconciling items included better results from Corporate Treasury activities due in part to positive effects related to hedging activities


The favorable market environment for our short cycle businesses, which was a material basis for our outlook, has significantly deteriorated in the second half of the fiscal year. Nevertheless, we confirm our financial expectations for fiscal 2019, even though it becomes more challenging to achieve our expectation of moderate growth in revenue, net of currency translation and portfolio effects. We continue to anticipate that orders will exceed revenue for a book-to-bill ratio above 1. We expect that Adjusted EBITA margin for our Industrial Businesses will reach the lower half of the range of 11.0% to 12.0% excluding severance charges. Finally, we confirm our expectation of basic EPS from net income in the range of €6.30 to €7.00 excluding severance charges.

This outlook excludes charges related to legal and regulatory matters.

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