The German technology group Siemens surprised positively with a strong start to the year: According to preliminary figures, the company earned more operationally than expected in the first quarter to the end of December. In particular, the automation and software businesses and the Smart Infrastructure division had developed strongly and delivered significantly higher results compared to the previous year. China was the main driver.
Siemens now wants to review its outlook for fiscal year 2020/21, as the group announced when it presented its preliminary figures in Munich. So far, the group has assumed a moderately increasing comparable turnover and a moderately increasing profit after taxes. The company plans to present its first quarter report on February 3rd.
Demand in the Siemens Digital Industries division recovered compared to the same period in the previous year. Incoming orders and sales rose by two and five percent, respectively, on a comparable basis. In nominal terms, however, new business declined slightly. The adjusted operating result (EBITA) rose by 57 percent to EUR 848 million. That was well above analyst expectations. Reasons for the good run are a better development in the short-cycle automation business, higher capacity utilization and a strong contribution to earnings from the software business. Siemens also benefited from savings.
The Smart Infrastructure division was also able to increase its adjusted EBITA significantly: by almost 40 percent to 391 million euros. Here, too, analysts had expected less in an estimate compiled by the company. As with Digital Industries, expenses for downsizing were significantly lower in the first quarter, and costs in connection with the pandemic were saved – for example in travel or marketing. On a comparable basis, incoming orders increased by seven percent and sales by four percent.
In contrast, the train business, with an adjusted Ebita of 219 million, developed roughly at the previous year’s level. Thanks to several large orders, however, new business increased by 67 percent. Sales rose by four percent.
The past fiscal year 2019/20 (as of September 30) was mixed for the technology group: Siemens suffered from a weaker economic environment and falling demand from the automotive and mechanical engineering industries, for example. The situation worsened over the course of the year due to the corona pandemic.
Investors reacted enthusiastically on the stock exchange, and the share soared to a record high. Shortly after the start of trading, the share rose to a new record, leaving the record set ten days ago behind. Most recently, the share at the top of the Dax was up around 5 percent at 130.04 euros. One trader spoke of a very positive surprise overall. Against this background, the shares appeared to be valued too cheaply. Analysts also reacted positively. Goldman Sachs raised the price target to 145 euros. The analysis company Jefferies said that profitability in the Digital Industries segment was “impressively high”. Therefore, higher targets for the entire financial year are now “very realistic”.
An analyst at the US bank JPMorgan judged: With the figures, the industrial group could have set an example this reporting season. At the beginning of January, the group pointed to better economic conditions than expected, especially in China. (dpa-afx / apa / red)