Shares of Siemens AG dropped approximately 5 percent in German trading on Thursday following the conglomerate's report of weakened second-quarter profits. The decline was attributed to the absence of last year's substantial gains and reduced revenues. Additionally, orders were down for the quarter. While Siemens reaffirmed its fiscal 2024 outlook, it adjusted its expectations for Digital Industries, anticipating lower comparable revenue and margins.
According to Ralf Thomas, Chief Financial Officer, "Based on our solid performance in the first half of the fiscal year, a very strong balance sheet recognized by our latest rating upgrade, and our record order backlog, we look to the future with confidence as a leading technology company. We confirm our outlook for fiscal 2024."
For the full fiscal year, Siemens maintains its forecast of 4 percent to 8 percent growth in comparable revenue, accounting for currency translation and portfolio effects, and expects a book-to-bill ratio above 1.
The company's Industrial Business is projected to drive profitable growth, leading to an increase in basic earnings per share pre-PPA to between 10.40 euros and 11.00 euros for fiscal 2024. This estimate excludes a positive contribution of 0.61 euros per share from Siemens Energy Investment in the first quarter.
In the second half of fiscal 2024, Digital Industries anticipates increased demand in its automation businesses and significant contract wins in its software segment. Consequently, Digital Industries now expects fiscal 2024 comparable revenue to range from 4 percent to 8 percent below the previous year, a downward revision from the prior estimate of flat to 3 percent growth. The profit margin projection has also been adjusted to 18 percent to 21 percent, down from the earlier forecast of 20 percent to 23 percent.
For the second quarter, net income attributable to shareholders decreased to 2.03 billion euros or 2.54 euros per share, from 3.48 billion euros or 4.34 euros per share in the prior year. Income from continuing operations fell by 43 percent to 2.034 billion euros or 4.35 euros per share. The previous year's results had benefited from a 1.6 billion euro tax-free gain from the reversal of an impairment on Siemens' stake in Siemens Energy AG. Earnings per share before purchase price allocation (pre-PPA) were 2.73 euros, compared to 4.57 euros last year.
Profit in the Industrial Business segment declined by 2 percent to 2.513 billion euros, with the profit margin dropping slightly to 14 percent from 14.2 percent in the previous year. The company’s quarterly revenue decreased by 1.3 percent to 19.16 billion euros from 19.416 billion euros, while comparable revenues remained flat. Orders dropped 13 percent to 20.45 billion euros from 23.64 billion euros, with comparable orders 12 percent lower than the previous year. The prior year’s results were bolstered by a significantly higher volume of large orders in Mobility.
Revenue in the Digital Industries segment declined by 13 percent to 4.51 billion euros, and orders fell by 14 percent to 4.25 billion euros. In contrast, Smart Infrastructure saw a 5 percent growth in revenue and a 10 percent increase in orders. Mobility revenue grew 6 percent, though orders plunged 49 percent in the quarter. Siemens Healthineers also reported a 2 percent growth in both revenue and orders.
On Germany's XETRA, Siemens shares were trading at 178.24 euros, down 5.04 percent.
