Siemens’ Order Growth Highlights Successful Third Quarter

SiemensMUNICH, Germany — Siemens reported third-quarter earnings today.

“Our global team delivered a strong quarter, highlighted by outstanding order intake, outperforming the market. We diligently address our opportunities and challenges going forward,” said Joe Kaeser, President and Chief Executive Officer of Siemens AG.

  • On a comparable basis, excluding currency translation and portfolio effects, orders rose 21% and revenue was level with
    the prior-year period
  • On a nominal basis, orders climbed 16% to €22.8 billion driven by a higher volume from large orders, while revenue came
    in at €20.5 billion, 4% lower than the prior-year quarter due primarily to currency translation effects; the book-to-bill ratio
    was 1.11
  • Industrial Business profit was up 2% at €2.2 billion and Industrial Business profit margin was 10.7%; excellent performance
    by Digital Factory and improvements in many Divisions partly offset by a sharp decrease in profit and profitability at Power
    and Gas
  • Net income of €1.2 billion was held back by substantially higher income tax rate compared to Q3 FY 2017, which also
    benefited from positive effects in Centrally managed portfolio activities; basic earnings per share (EPS) of €1.36 compared
    to €1.67 in Q3 FY 2017


  • Strong order growth due to a higher volume from large orders in Siemens Gamesa Renewable Energy (SGRE), Power and Gas and Mobility; in addition, higher order intake in nearly all other industrial businesses, led by Digital Factory
  • Revenue down due to negative currency translation effects on a comparable basis, revenue was flat with increases in the majority of industrial businesses offset by significant declines in Power and Gas and SGRE
  • The resulting strong book-to-bill ratio of 1.11 lifted the order backlog to a record high of €132 billion
  • Negative currency translation effects took five percentage points from order growth and four percentage points from revenue development; portfolio transactions had a minimal effect on volume development year-over-year
  • Profit Industrial Business: another excellent quarter for Digital Factory, which delivered both the largest profit contribution and highest profit increase among the industrial businesses, along with a strong performance in other industrial businesses; in contrast, profit in Power and Gas fell sharply due to ongoing adverse market conditions; overall profit and profitability impacted by negative currency effects particularly at Siemens Healthineers, Energy Management and Process Industries and Drives
  • Income from continuing operations impacted by substantially higher income tax rate while Q3 FY 2017 benefited from positive effects within Centrally managed portfolio activities (CMPA)
  • Net income benefited from a €53 million pre-tax effect within discontinued operations, arising from release of a provision related to former Communications activities
  • Substantial increase in Free cash flow from Industrial Business, to €1.802 billion from €1.397 billion in Q3 FY 2017, due mainly to SGRE which recorded a significant build-up of operating net working capital in Q3 FY 2017; this improvement was more than offset by cash outflows outside Industrial Business primarily including a significant contribution to strengthen Siemens’ pension assets and further safeguard the post-employment benefits of employees in the U.S.
  • Decrease in provisions for pensions and similar obligations, to €7.6 billion as of June 30, 2018 (March 31, 2018: €8.1 billion); decrease due mainly to the significant contribution
  • ROCE decreased due to lower net income which more than offset the positive effect of a slight decline in average capital employed

Power and Gas

  • Higher volume from large orders which included contracts worth €0.4 billion each for combined-cycle power plants in Israel and the U.K., including service
  • Substantial revenue decline with decreases in all reporting regions, particularly in the solutions business which in Q3 FY 2017 recorded higher revenue from large orders in Egypt
  • Profit down sharply on lower revenue, price declines and low capacity utilization; continuing strong contribution from the service business which included a gain of €80 million from a divestment
  • Global energy trends continue to structurally reduce overall demand in markets for the Division’s offerings, resulting in declining new-unit large turbine business and corresponding price pressure due to structural overcapacities and aggressive competitive behavior

Energy Management

  • Lower volume from large orders in the transmission solutions business
  • Revenue growth on a comparable basis led by the high voltage and low voltage products and the transmission solutions businesses; on a regional basis, substantial growth in Asia, Australia
  • Profit up despite negative currency effects on improved performance particularly in the low voltage products and transmission solutions businesses

Building Technologies

  • Order growth was driven by the region comprising Europe, C.I.S., Africa, Middle East (Europe/CAME), including a number of multi-year service contracts in Germany, and the Asia, Australia region
  • Revenue growth particularly in the U.S. was largely offset by negative currency translation effects
  • Profit and profit margin rose on productivity improvements
  • Continued expansion of advanced digital offerings for smart buildings and related IoT applications


  • Higher volume from large orders, particularly €0.7 billion from Siemens’ largest-ever rail infrastructure order including service, in Norway
  • Revenue growth in the majority of businesses, most notably in the rolling stock and related services businesses within the Europe/CAME region
  • Profit close to the prior-year level, impacted by mix effects; profit margin well within the target range
  • In July 2018, shareholders of Alstom SA approved the proposed combination of Alstom with Siemens’ mobility business (including its rail traction drive business which is part of the Division Process Industries and Drives); closing of the transaction is subject to approval by antitrust authorities and is expected in the first half of calendar 2019

Digital Factory

  • Strong volume growth with increases in all businesses; excellent development in the short-cycle businesses, which again outperformed the market and in the product lifecycle management (PLM) software business, driven by significant contract wins for Mentor
  • On a geographic basis, growth in all reporting regions; particularly strong order growth in the U.S. and Germany and a continued high level of demand in China; strong revenue growth in the U.S. and China
  • Sharply higher profit and profitability, with increases in all businesses; strongest improvement in the PLM software business; Q3 FY 2017 included €77 million in transaction and integration costs related to the acquisition of Mentor; overall profit and profitability impacted by ongoing expenses related to Siemens’ MindSphere platform investments

Process Industries and Drives

  • Higher orders in all businesses; revenue growth in the large drives and process automation businesses partly offset by a decline in the mechanical components business following weak demand in previous quarters
  • On a geographic basis, orders up in all regions while revenue growth was driven by the Asia, Australia region; both order and revenue growth included strong contributions from China
  • Broad-based improvements in profit and profitability despite negative currency effects

Siemens Healthineers

  • Orders and revenue flat due to significant negative currency translation effects
  • Comparable revenue growth led by the imaging business
  • Profit held back by significant currency headwinds and lower profitability in the diagnostics business resulting from the continuing rollout of the Atellica platform

Siemens Gamesa Renewable Energy

  • Sharp order growth due to a higher volume from large orders which included a €1.3 billion contract win for an offshore wind-farm, including service, in the U.K.; several large orders in the onshore business, which shows signs of price stabilization
  • Substantially lower revenue and profit due mainly to pricing pressure associated with past orders for onshore wind turbines and timing factors related to the execution of large offshore wind projects

Financial Services

  • Continued strong earnings contribution from Financial Services included a gain from the sale of a stake in an equity investment

Reconciliation to Consolidated Financial Statements

  • Centrally managed portfolio activities (CMPA): Q3 FY 2017 included income from reversals of provisions for post-closing guarantees related to a former divestment and for warranties
  • Results of CMPA are expected to remain volatile in coming quarters


We continue to expect basic EPS from net income in the range of €7.70 to €8.00, excluding severance charges. Furthermore, we confirm our expectation of modest growth in revenue, net of effects from currency translation and portfolio transactions, and continue to anticipate that orders will exceed revenue for a book-to-bill ratio above 1 for the full fiscal year. We continue to expect a profit margin of 11.0% to 12.0% for our Industrial Business also excluding severance charges.

This outlook excludes charges related to legal and regulatory matters and potential effects which may follow the introduction of a new strategic program.

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