SIEMENS AG Joe Kaeser, President and CEO | Ralf P. Thomas, CFO
Q1 FY 2017 Analyst Call | Munich, February 1, 2017
Unrestricted © Siemens AG 2017
siemens.com
Notes and forward-looking statementsThis 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 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 Risks in the Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur 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. Siemens 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 - in IFRS not clearly defined - supplemental financial measures that are or may be non-GAAP financial measures. These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial 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.
Q1 FY 2017 - Strong execution of Vision 2020 drives profitability- Egypt megaproject milestone achieved
- Orders -14% to €19.6bn due to fewer large orders; base orders stable
- Continued moderate revenue growth +3% supported by most divisions
- Strong quarter with 8 out of 9 Divisions in or at target range
- Gross margin up 90bps y-o-y to 31.4%
- Industrial Business margin expansion to 13.0% (+260bps) - strong operational execution and eCar JV gain (90bps)
- Net income up 25% y-o-y at €1.9bn - drives EPS to €2.35 and ROCE to 18.9%
-
Strong free cash flow of €0.7bn
Note: Order and Revenue growth rate comparable, i.e. adjusted for currency translation and portfolio effects
Guidance FY 2017 - Earnings outlook raisedEPS ("all-in") Guidance
in €
7.20 - 7.70
We anticipate increasing headwinds for macroeconomic growth and investment sentiment in our markets due to the complex geopolitical environment.
6.80 - 7.20
6.74
Therefore, we continue to expect modest growth in revenue, net of effects from currency translation and portfolio transactions. We further continue to anticipate that orders will exceed revenue for a book-to-bill ratio above 1.
After a strong start into the fiscal year, we raise our previous expectation for profit and EPS for fiscal 2017. We raise our previous expectation for the profit margin of our Industrial Business in the range of 10.5% to 11.5% to the range of 11.0% to 12.0%.
Furthermore, we raise our previous expectation for basic EPS from net income in the range of €6.80 to €7.20 to the range of €7.20 to €7.70.
This outlook assumes continuing stabilization in the market environment
FY 2016
FY 2017e FY 2017e
as of as of
Q4 FY 16 Q1 FY 17
for our high-margin short-cycle businesses.
It further excludes charges related to legal and regulatory matters as well as potential burdens associated with pending portfolio matters.
Note: FY 2016 weighted average number of shares of 809m
PG: Stringent execution, however market remains tough WP: Excellent performance ahead of planned mergerOrders
Revenue
Power and Gas (PG)
Wind Power and Renewables (WP)
Orders Revenue
€bn
€bn
-40%1)
+7%1)
5.5
3.3
3.7
3.9
-24%1)
1.9 1.4
1.2
+18%1)
1.4
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Profit
Profit margin
Profit
€m
+31%
+230bps
11-15%
11.8%
€m +119%
458
9.5%
349
51
111
Profit margin
+380bps
4.2%
4.3%
8.1%
8.0%
5-8%
Q1 FY 16
Q1 FY 17
10.4%
Q1 FY 16
11.9%
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16 Q1 FY 17
Orders down on tough comps
Revenue driven by strong backlog conversion
Stringent project execution & strong service contribution
Lower volume from large orders
Productivity and operational excellence drive margin
1) Comparable, i.e. adjusted for currency translation and portfolio effects x.x%: Margin excl. severance (and excl. integration cost D-R for PG only)
EM: Consistent improvement continues BT: Outstanding performance across all metricsEnergy Management (EM)
183
189
7-10%
6.6%
6.7%
10.9%
131
170
8.9%
Building Technologies (BT)
Orders
Revenue
Orders
Revenue
€bn
€bn
-14%1)
+3%1)
+11%1)
+5%1)
3.5
3.0
2.8
2.8
1.5
1.7
1.5
1.6
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Profit
Profit margin
Profit
Profit margin
€m
+3%
+10bps
€m
+29%
+200bps
8-11%
Q1 FY 16
Q1 FY 17
6.6%
Q1 FY 16
7.2%
Q1 FY 17
Q1 FY 16
Q1 FY 17
8.9%
Q1 FY 16
11.2%
Q1 FY 17
Double digit revenue growth in Asia, Australia
Higher profit in majority of businesses led by High Voltage Products and Transmission Solutions
Strong order growth across all regions
Profit driven by revenue growth and productivity gains
Digital Factory (DF)
668
14-20%
26.1%
417
16.9%
Q1 FY 16
Q1 FY 17
17.2%
Q1 FY 16
26.3%
Q1 FY 17
€m
+7%
126
135
+70bps
8-12%
Q1 FY 16
Q1 FY 17
5.7%
6.1%
Q1 FY 16
6.4%
6.7%
Q1 FY 17
Process Industries and Drives (PD)
Orders
Revenue
Orders
Revenue
€bn
€bn
+7%1)
+4%1)
-6%1)
-3%1)
2.5
2.7
2.5
2.6
2.3
2.1
2.2
2.1
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Profit
Profit margin
Profit
Profit margin
€m
+60%
eCar gain
€172m (670bps)
+920bps
Broad based order and revenue growth with particular
strength in China
High margin short cycle businesses drive margin
Ongoing weak demand in commodity related industries,
strong demand for wind power components
Continued execution of structural measures
Mobility (MO)
-30bps
193
6-9%
163
9.4%
9.1%
541
620
16.5%
15-19%
18.9%
Healthineers (HC)
Orders
Revenue
Orders
Revenue
€bn
€bn
-17%1)
-8%1)
+4%1)
+0%1)
2.7
2.2
2.0
1.8
3.4
3.5
3.3
3.3
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Q1 FY 16
Q1 FY 17
Profit
Profit margin
Profit
Profit margin
€m
-15%
€m
+15%
+240bps
Q1 FY 16
Q1 FY 17
9.6%
Q1 FY 16
9.3%
Q1 FY 17
Q1 FY 16
Q1 FY 17
16.8%
Q1 FY 16
19.2%
Q1 FY 17
Book-to-bill clearly above 1 despite lower large orders
Revenue decline due to timing factors of large projects
Solid execution on high profitability
Clear order growth in Asia, Australia, particularly China
Broad based profitability improvement
Siemens
One Siemens
Financial Framework
Growth:
Siemens > most relevant competitors1)
(Comparable revenue growth)
Capital efficiency
(ROCE2))
15 - 20%
Total cost productivity3)
3 - 5% p.a.
Capital structure
(Industrial net debt/EBITDA)
up to 1.0x
Dividend payout ratio
40 - 60%4)
Profit Margin ranges of businesses (excl. PPA)5)
PG
11 - 15%
EM
7 - 10%
MO
6 - 9%
PD
8 - 12%
SFS6)
15 - 20%
WP 5 - 8%
BT
8 - 11%
DF
14 - 20%
HC
15 - 19%
ABB, GE, Rockwell, Schneider, Toshiba, weighted; 2) Based on continuing and discontinued operations; 3) Productivity measures divided by functional costs (cost of sales, R&D, SG&A expenses) of the group; 4) Of net income excluding exceptional non-cash items; 5) Excl. acquisition related amortization on intangibles; 6) SFS based on return on equity after tax
Siemens Vision 2020 Clear intents for our seven overarching goalsGOAL
INTENT
KPI
1Implement stringent company gover-
nance with effective support functions
Live lean governance and
drive continuous optimization
€1bn cost savings by FY 2016 achieved
Continued productivity of 3-5%
2Strengthen portfolio
3Execute financial
target system
4Expand global management
Sharpen our business focus in electrification, automation, and digitalization
Grow our company value
Get closer to our customers and markets
Tap growth fields
> 8% margin in underperforming businesses
15-20% ROCE
Growth > most relevant competitors
> 30% of Division and BU management outside Germany
5Be a partner of choice
for our customers
Foster an intimate and trusting partnership
w
1
≥ 20% improvement in Net Promoter Score
ith our customers
6Be an employer of choice
Unleash the full potential of our people
> 75% approval rating in leadership and diversity in SGES
7Foster
Ownership Culture
Ignite pride and passion for Siemens,
through a new mindset and equity ownership
≥ 50% increase in number
of employee shareholders
Financial cockpit - Q1 FY 2017Orders
in €bn
Revenue
Net Income
in €bn
Profit Industrial Business (IB)
-14%
(-14%)
Comp.
(nom.)
+3%
(+1%)
+25%
in €bn
22.8
19.6
18.9
19.1
B-t-B
1.21
1.02
Q1 FY 16 Q1 FY 17 Q1 FY 16 Q1 FY 17
Margin
Q1 FY 16
+26%
1.9
1.6
2.0
13.2%
13.0%
10.7%
10.4%
2.5
Q1 FY 16
Q1 FY 17
Q1 FY 17
EPS ("all-in")
in €
18.9%
16.3%
ROCE ("all-in")
+25%
1.89
2.35
Q1 FY 16
Q1 FY 17
Q1 FY 16
15 - 20%
Q1 FY 17
Capital structure
0.8x
0.7x
≤1
Q1 FY 16
Q1 FY 17
10.4% Margin as reported
10.7% Margin excl. severance
CMPA with profit of €0.4bn, high volatility as expectedBelow Industrial Business - Q1 FY 2017
in €m
Expectations for FY 2017 unchanged
SFS: "operationally" in line with FY 2016
CMPA: includes other portfolio elements; volatility remains in FY 2017
SRE: in line with prior year, dependent on disposal gains
Corporate Items: ~€150m per quarter on higher central
innovation invest; H2>H1
Pension: ~€125m per quarter
PPA: in line with FY 2016
Elimination, Corporate Treasury, Other: in line with FY 2016
Tax: expect 26 - 30%
Discontinued Operations: immaterial
409 72
2,514
140
-183
-168
-142
Therein:
€99m Pensions
€85m Corp. Items
-714
1,927
12 1,938
Including effects related to:
asset retirement obligation (interest)
reversal of provisions related to a former divestment
Tax rate
@27%
IB
SFS
CMPA
SRE
Corp.
PPA
Elim.
Tax
Inc.
Disc.
Net
Items
Corp.
Cont.
Ops.
Income
& Pen.
Treas.,
Other
Ops
all in
Net debt bridge - Q1 FY 2017SFS Debt
Post emp. Benefits
Credit guarantees
Fair value adj.
(hedge accounting)
Q1
+23.1
-11.1
-0.8
+0.6
ΔQ4
+0.7
+2.6
+0.0
+0.0
Adj. ind. Net Debt/ EBITDA (c/o)
0.7x
(Q4 FY16: 1.0x)
€bn
Operating Activities
therein:
Δ Inventories -0.3
Δ Trade and other receivables +0.2
Δ Trade payables -0.7
Δ Billings in excess +0.4
-8.0
therein a.o.:
CAPEX
-0.4
-19.1
Net Debt Q4 2016
Cash & cash equiv.
€11.91)
1.5
Cash flows from op. activities
(w/o ∆ working capital)
-0.4
∆ Working Capital
-0.3
Cash flows from investing activities
-1.5
Financing and other topics
-19.8
Net Debt Q1 2017
Cash &
cash equiv.
€10.81)
11.8
Net Debt adjustments
Adj. ind. Net Debt Q1 2017
Including current available-for-sale financial assets
-
SFS Key figures - Q1 FY 2017
Key financials SFS
Assets
Income before income taxes
Return on Equity after tax
Operating and Investing Cash Flow
€27.3bn
€140m
17.7%
€347m
Assets
Liabilities and Equity
€bn €bn
24.0 1.4
1.8
0.1
27.3
27.3
2.7
Leases & Loans1)
Equity Investments
Other Assets
& Inventory2)
Cash
Total Assets
Total Liabilities
& Equity
Allocated Equity
23.1
Total Debt
1.5
Accruals & Other Liabilities
Operating and finance leases, loans, asset-based lending loans, factoring and forfaiting receivables
Intercompany receivables, securities, (positive) fair values of derivatives, tax receivables, fixed assets, intangible assets, land and building, prepaid expenses and inventories
Provisions for pensions & similar obligations decreased in Q1, mainly due to increased discount rate assumptionsQ1 FY 2017 Key financials - Pension and similar obligations
in €bn1)
FY 2014
FY 2015
FY 2016
Q1 FY 2017
Defined benefit obligation (DBO)2)
(35.6)
(36.8)
(42.2)
(39.0)
Fair value of plan assets2)
26.3
27.1
28.7
28.1
Provisions for pensions and similar obligations
(9.3)
(9.8)
(13.7)
(11.1)
Discount rate
3.0%
3.0%
1.7%
2.3%
Interest Income
0.8
0.8
0.8
0.1
Actual return on plan assets
2.9
0.5
3.3
-0.5
All figures are reported on a continuing basis.
Fair value of plan assets including effects from asset ceiling (Q1 2017: €-0.1bn); difference between DBO and fair value of plan assets additionally resulted in net defined benefit assets (Q1 FY 2017:€+0.2bn); Defined Benefit Obligation (DBO), including other post-employment benefit plans (OPEB)
Note: Beginning with fiscal 2017, we report 'provisions for pensions and similar obligations' as presented in the Consolidated Statements of Financial Position, which also include Siemens` underfunding of other post-employment benefit plans.
Prior years are presented on a comparable basis.
Financial calendarFebruary
February 1, 2017
Annual General Meeting and Q1 Earnings Call (Munich)
February 9, 2017
Roadshow Germany (Munich)
February 10, 2017
Roadshow Switzerland (Zurich)
February 13, 2017
Roadshow Germany (Frankfurt)
March
March 22, 2017
Bank of America Merrill Lynch Conference (London)
May
May 4, 2017
Q2 Earnings Release
Investor Relations contacts Investor RelationsInternet:
www.siemens.com/investorrelations
Email:
investorrelations@siemens.com
IR-Hotline:
+49 89 636-32474
Fax:
+49 89 636-32830
Siemens AG published this content on 01 February 2017 and is solely responsible for the information contained herein.
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