Siemens ends fiscal 2012 with revenue growth and strong profit

In fiscal 2012, ended on 30 September 2012, new orders declined year-over-year by 10% from EUR 85.2 billion to EUR 76.9 billion while revenue, in contrast, rose 7% company-wide, thanks to the sustained strong order backlog and positive currency translation effects in all Sectors.

In fiscal 2012, Siemens achieved a 7% gain in revenue and a strong profit. Income from continuing operations was EUR 5.2 billion and thus in line with expectations. New orders declined 10% year-over-year. “A strong fourth quarter enabled us to fulfil our expectations for fiscal 2012 and achieve one of our best years ever,” said Peter Löscher, President and CEO of Siemens AG. “Even so, we didn’t fully succeed in significantly boosting our performance vis-à-vis competitors, as we did in recent years. To get back to reaching our own goals, we’ve launched ‘Siemens 2014,’ a company-wide programme aimed at raising our Total Sectors profit margin to at least 12%. We know what we have to do – and we’re doing it.”
In fiscal 2012, ended on 30 September 2012, new orders declined year-over-year by 10% from EUR 85.2 billion to EUR 76.9 billion while revenue, in contrast, rose 7% company-wide, thanks to the sustained strong order backlog and positive currency translation effects in all Sectors, from EUR 73.3 billion to EUR 78.3 billion. The book-to-bill ratio was 0.98. The order backlog reached EUR 98 billion.
In the Energy Sector, new orders declined year-over-year by 14% to EUR 26.9 billion, due in part to a lower volume of major orders than in the prior year. Sector revenue, on the contrary, climbed 12% to EUR 27.5 billion. The Healthcare Sector showed a positive development, with both new orders and revenue above prior-year levels. While new orders grew 5% from EUR 13.1 billion in the previous year to EUR 13.8 billion, revenue climbed 9% from EUR 12.5 billion to EUR 13.6 billion.
The Industry Sector posted new orders worth EUR 20.0 billion following a total of EUR 20.2 billion in the previous year. Revenue rose 5% to EUR 20.5 billion. At the Infrastructure & Cities Sector, new orders dropped 20% to EUR 17.2 billion, primarily due to the major rail business orders booked in the prior year, such as for the ICx – the biggest order in the company’s history. All other Divisions in the Sector showed higher order volumes than in the previous year.
Despite positive revenue trends in all Sectors, Total Sectors profit declined from EUR 9.4 billion in the prior year to EUR 7.5 billion. Income from continuing operations dropped year-over-year from EUR 7.4 billion to EUR 5.2 billion, and net income fell 27% to EUR 4.6 billion.
While Healthcare Sector profit rose more than one-third to EUR 1.8 billion, the other three Sectors posted declining profits. Profit at the Energy Sector dropped from EUR 4.2 billion in the prior year to EUR 2.2 billion. The burdens here included costs related to the power transmission platforms being installed in the North Sea for wind farms. In accordance with project accounting principles, the Sector also recorded EUR 327 million in profit impacts stemming from a fourth-quarter change in credit risk assessment for Iran. The Industry Sector showed a profit of EUR 2.5 billion for fiscal 2012, following EUR 2.7 billion in the previous year. Profit at Infrastructure & Cities was EUR 1.1 billion, only slightly below the prior-year level.
Although Siemens achieved one of the best results in the company’s history in fiscal 2012, the company lagged behind its own high objectives defined in the One Siemens target system. With its two-year “Siemens 2014” programme, the company is aiming to reduce costs by EUR 6 billion, increase its competitiveness, and become faster and less bureaucratic. The goal is to increase the Total Sectors profit margin from 9.5% in fiscal 2012 to at least 12% by fiscal 2014.
The targets communicated mid-year for fiscal 2012 were reached. On this basis, the Supervisory Board and the Managing Board will propose, as last year, a dividend of EUR 3.00 to shareholders at the Annual Shareholders’ Meeting in January 2013. In addition, Siemens shareholders have also profited from the company’s share buyback programme totalling around EUR 2.9 billion of recent months. For the future, Siemens is striving for a payout ratio of 40 to 60% from dividends and possible share buyback programmes.
In fiscal 2013, Siemens begins implementation of “Siemens 2014,” a company-wide programme supporting its One Siemens framework for sustainable value creation. The goal of the programme is to raise its Total Sectors profit margin to at least 12% by fiscal 2014.
In the first year of the programme, the company expects moderate order growth and revenue approaching the level of fiscal 2012, both on an organic basis. Siemens expects income from continuing operations in the range from EUR 4.5 to EUR 5.0 billion, including the effect of retrospective adoption of IAS 19R. This includes charges totalling approximately EUR 1.0 billion for programme-related productivity measures in the Sectors, with the productivity gains realized in results for fiscal 2014.
This outlook is based on a number of conditions, notably that revenue develops as expected particularly for businesses that are sensitive to short-term changes in the economic environment.
Furthermore, it excludes impacts related to legal and regulatory matters and significant portfolio effects.