Financial Data and Key Metrics Changes - The company reported a revenue growth of 5% to EUR 18.9 billion overall, with the largest growth contribution from smart infrastructure, which was up by 10% [6][7] - Earnings per share (EPS) pre-PPA came in at EUR 2.66, reflecting strong financial performance across metrics [9] - The backlog stands at a strong EUR 113 billion, indicating potential for further profitable growth [5] Business Line Data and Key Metrics Changes - Smart infrastructure delivered EUR 6 billion in orders, showing double-digit growth, while Siemens Healthineers grew by 4% [5][6] - Digital industries revenue was flat year-over-year, with significant growth in the software business, which increased by 82% due to large license contracts [6][16] - Automation business saw a decline in orders, down by 25% compared to the previous year, affected by lower contributions from fast-turning orders [16] Market Data and Key Metrics Changes - The Americas experienced strong revenue growth of 11%, driven by the United States, while EMEA was down 3% due to weakness in Germany [9] - Asia-Australia increased by 12%, indicating a mixed performance across regions [9] - The pricing environment in China remains challenging due to competitive pressure, with inventory levels still elevated [18] Company Strategy and Development Direction - The company aims to foster organic growth through targeted investments in production capacity and manpower, focusing on sustainability [8][10] - Continued investments in electrical equipment capacities in the U.S. and expansion of facilities in Frankfurt are planned to meet rising demand [11] - The company is committed to driving sustainable infrastructure transformation and enhancing its competitive position in the market [8][10] Management's Comments on Operating Environment and Future Outlook - Management noted that economic activity remains muted, particularly in China and Europe, leading to weak investment sentiment in core markets [6][19] - The company expects demand to develop slower than previously anticipated, with a cautious outlook for the automotive and machinery sectors [19] - Despite macroeconomic headwinds, the company remains focused on delivering value creation through profitable growth and resilient cash generation [30] Other Important Information - The company received a Platinum medal from EcoVadis for its sustainability management, ranking in the top 1% of assessed companies [9][13] - The divestment of the wiring accessories business in China to ABB is expected to close within 12 months [24] - Free cash flow performance in the first nine months was solid, with a focus on maintaining a double-digit return on revenue [29] Q&A Session Summary Question: Underlying demand in the US and Europe for DI - Management indicated that the macro environment shows muted growth momentum for production output and customer demand, particularly in Europe and China [33][34] Question: Profitability outlook for DI - Management acknowledged that while the software business had an exceptional quarter, the fourth quarter is expected to see lower profitability due to a tough comparison with the previous year [41][44] Question: Revenue run rate for DI software - Management confirmed that the software business is expected to continue growing, with a strong focus on ARR and cloud-based activities [50][52] Question: Concerns about AI investments - Management noted that while there is some hype around AI, the demand for energy and green energy is rising, indicating a super cycle in electrification markets [56] Question: Margin expectations for smart infrastructure - Management expressed confidence in further margin improvement, emphasizing the team's ability to balance growth needs with profitability [60][62]
Siemens(SIEGY) - 2024 Q3 - Earnings Call Transcript