Financial Data and Key Metrics Changes - The second quarter financial impact from exiting the Russian market amounted to approximately €600 million, primarily due to non-cash accounting impairments, write-offs, and charges [13][26] - Despite the significant effects from the exit, the company confirmed its group guidance for fiscal '22, supported by strong operational performance and positive portfolio effects [15][20] - Revenue grew by 7% to €17 billion, with a book-to-bill ratio of 1.23 and a record backlog of €94 billion [24][25] Business Line Data and Key Metrics Changes - Digital Industries Automation business revenue increased by 16%, with annual recurring revenue growth of 13% and cloud ARR share rising to 9% [18][19][33] - Smart Infrastructure saw revenue growth of 8%, driven by a 15% increase in the electrical products business [59] - Mobility experienced a revenue decline of 9%, significantly impacted by the Russian market exit, with a backlog of €36 billion [66][68] Market Data and Key Metrics Changes - Order growth momentum was strong at 22%, with notable contributions from Germany (up 10%) and the U.S. (up 17%), while China remained flat [25] - The company reported double-digit order growth across all regions, with China leading at 27% [53] - The U.S. market faced specific supply chain challenges, impacting the automation business [106] Company Strategy and Development Direction - The company aims to grow its digital business by approximately 10% annually until 2025, with a focus on digitalization, automation, and sustainability [30][27] - Strategic initiatives include simplifying the portfolio and enhancing digital and sustainable business operations [16][40] - The company is actively managing supply chain challenges and balancing cost inflation with pricing actions [20][64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatile macroeconomic environment, exacerbated by the war in Ukraine and ongoing supply chain constraints [20][21] - The company expects continued growth momentum in key markets, with a revenue growth forecast of 6% to 8% for the Siemens Group [86] - Management remains confident in the underlying growth drivers for Siemens, particularly in digitalization and resource efficiency [27][40] Other Important Information - The company has initiated a share buyback program to strengthen its balance sheet and enhance shareholder value [76] - The pension deficit was reduced to a historic low of €2.2 billion, although inflation may impact future assessments [77][84] - The company is preparing for potential regulatory changes and market dynamics, particularly in China [115][118] Q&A Session Summary Question: Impact of SaaS acceleration on margins in Digital Industries - Management confirmed a 100 basis point negative impact from SaaS acceleration in the quarter, which was unexpected but within the anticipated range for the fiscal year [95][96] Question: Price-cost dynamics in Digital Industries - Management stated that pricing power remains strong, and they are successfully managing cost inflation through pricing actions [103][132] Question: Details on expected impacts from Russia - The company outlined a €572 million after-tax impact from Russia, with potential future risks estimated at low to mid-triple-digit millions, primarily non-cash [126][128] Question: Order intake growth and backlog margin - Management indicated that order intake growth is solid, supported by pricing power, and the quality of the backlog remains high despite inflationary pressures [132][134]
Siemens(SIEGY) - 2022 Q2 - Earnings Call Transcript