Financial Data and Key Metrics Changes - In Q3, Siemens reported orders of EUR 20.5 billion, a 44% increase compared to the prior year quarter, driven by double-digit growth across all businesses, resulting in a strong book-to-bill ratio of 1.27 [30] - Revenue increased by 21% to EUR 16.1 billion, with adjusted EBITA for the four industrial businesses rising to EUR 2.3 billion, reflecting strong top-line driven profit momentum [31][32] - The profit margin improved to 15.3%, up by 100 basis points, translating to earnings per share of EUR 1.68 [32] Business Line Data and Key Metrics Changes - Digital Industries saw a 23% year-over-year revenue growth, with strong demand across automation sectors, while software revenue grew modestly by 2% [36][37] - Smart Infrastructure reported a 15% revenue growth, with orders up 24%, particularly benefiting from a sharp increase in electrical products [42] - Mobility's revenue grew by 5%, driven by rail infrastructure, while the service business saw a moderate increase of 4% [47] Market Data and Key Metrics Changes - Germany's revenue increased by 30%, the U.S. grew by 19%, and China saw a 14% increase, indicating strong recovery across all major regions [31] - China experienced a 56% order growth in Digital Industries, although a normalization of growth is expected going forward [36] Company Strategy and Development Direction - Siemens is focused on executing strategic priorities and enhancing its portfolio through bolt-on acquisitions, particularly in digital services and software [5][14] - The company aims to drive profitable growth and steady cash generation while addressing supply chain challenges and material cost inflation [11][12] - Siemens is committed to sustainability, with initiatives aimed at achieving net-zero operations by 2030 [26][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued economic recovery, particularly in China, Europe, and the U.S., despite potential growth moderation [6][12] - The company raised its fiscal 2021 outlook, expecting revenue growth of 11% to 12% and net income in the range of EUR 6.1 billion to EUR 6.4 billion [12][59] - Management acknowledged challenges from supply chain constraints and elevated raw material prices but emphasized strong execution and cash flow management [9][58] Other Important Information - Siemens Healthineers' acquisition of Varian is performing well, contributing positively to the overall outlook [50] - The company is actively managing working capital, achieving a free cash flow of EUR 2.3 billion in Q3 [32][58] Q&A Session Summary Question: Can you discuss the trends in short-cycle business by region? - Management noted that while China shows strong momentum, growth is expected to moderate, with the U.S. and Europe also having good opportunities for double-digit growth [64][66] Question: What is driving the Smart Infrastructure margin at 12%? - The margin improvement is attributed to growth in both product and solution businesses, with significant contributions from the product side [70][73] Question: Why is there a gap between order growth and revenue growth in Digital Industries? - The gap is due to high order levels leading to extended delivery times and a significant backlog in short-cycle business [76][80] Question: What is the impact of transitioning to Software-as-a-Service on revenue? - There has not yet been a material impact on revenue from the SaaS transition, but customer feedback has been positive [90][100] Question: Will Siemens continue to reduce complexity in its portfolio? - Management confirmed the intention to reduce complexity, particularly in Siemens Energy and other portfolio companies, while focusing on core competencies [103][104]
Siemens(SIEGY) - 2021 Q3 - Earnings Call Transcript