Financial Data and Key Metrics Changes - The company reported a revenue growth of 4% to almost EUR18 billion, with a book-to-bill ratio of 1.23 and a record high-quality backlog of EUR99 billion [21][15] - Earnings per share (EPS) pre-PPA came in at EUR1.52, while the all-in amount was a negative EUR1.85 due to a EUR2.7 billion noncash impairment on Siemens Energy [21][19] - Free cash flow for the quarter was EUR2.3 billion, with expectations to achieve more than 11% free cash flow as a percentage of sales for the full fiscal year [18][68] Business Line Data and Key Metrics Changes - Digital Industries saw a revenue increase of 15%, with a strong order growth of 35% and a book-to-bill ratio of 1.33 [44][15] - Smart Infrastructure achieved a revenue growth of 10%, driven by an 18% increase in the electrical products business and a 26% increase in orders [53][54] - Mobility's revenue grew by 4%, with a backlog of EUR36 billion, although impacted by supplier delays and pandemic-related effects [60][62] Market Data and Key Metrics Changes - Revenue growth in the Americas was up 10%, while Asia and Australia saw a 7% increase, led by India and Korea [21] - China experienced flat growth due to COVID-19 lockdowns, but there was a strong recovery in June, with expectations for continued momentum [16][92] - Europe saw a decline in sales primarily due to lower COVID test sales, but overall demand remained strong in other sectors [21][56] Company Strategy and Development Direction - The company aims to grow its digital business by approximately 10% annually until 2025, with a strong growth trajectory already evident [22] - The acquisition of Brightly is expected to enhance the Smart Infrastructure team's capabilities in asset and maintenance management solutions [23] - Siemens Xcelerator is being developed as an open digital business platform to facilitate digital transformation across various sectors [26][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating geopolitical and economic challenges, emphasizing strong demand for technology and a focus on operational execution [6][8] - The company is prepared for potential risks from energy availability and supply chain constraints, with a low direct energy supply impact on manufacturing [9][10] - Future growth is anticipated in automation and digitalization, with a focus on sustainability and resource efficiency [12][33] Other Important Information - The company has taken precautionary measures to safeguard production operations in the event of gas shortages, with only 1% of purchasing volume being energy supply [9][10] - The strategic transition to Software-as-a-Service is progressing well, with a high renewal rate of 76% for PLM renewables [31] - The company is actively working on derisking supply chains and expanding partnerships to mitigate impacts on customers [14] Q&A Session Summary Question: Demand in Europe and Germany - Analysts inquired about customer plans to mitigate risks related to energy shortages and the potential impact on order conversion, particularly in energy-intensive markets [78] - Management responded that while there could be impacts on customer production processes, Siemens is positioned to assist customers in their sustainability transformations [81] Question: Integration of Software Offerings - Analysts asked about the integration of software offerings across divisions following the acquisition of Brightly [83] - Management highlighted the Siemens Xcelerator platform, which enables interoperability and modular solutions across different business areas [84] Question: Situation in China - Analysts sought clarification on the inventory situation and momentum in China, particularly regarding the impact of lockdowns [90] - Management confirmed strong order momentum in the third quarter and noted that factories were recovering well post-lockdown [92] Question: Russian Operations and Charges - Analysts inquired about the residual risks and potential future charges related to the exit from Russian operations [110] - Management provided details on the charges incurred and indicated that the focus is now on unwinding the leasing business in Russia [111]
Siemens(SIEGY) - 2022 Q3 - Earnings Call Transcript