Siemens(SIEGY) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Order growth increased by 15%, revenue rose by 7%, and profit for industrial business surged by 39% year-over-year, indicating strong performance compared to pre-COVID quarters [6][22] - Adjusted EBITDA for the four industrial businesses reached €2.1 billion, contributing to a margin performance of 16% and earnings per share of €1.72 [24][26] Business Line Data and Key Metrics Changes - Digital Industries outperformed expectations with a 34% order growth in China and a 27% revenue increase, while overall automation saw a strong recovery [28][30] - Smart Infrastructure reported a 7% increase in orders, driven by over 20% growth in electrical products, and a revenue growth of 4% across major regions [37][39] - Mobility showed strong performance with substantial order growth and industry-leading margins despite pandemic-related challenges [42] Market Data and Key Metrics Changes - China demonstrated robust demand, with GDP surpassing pre-pandemic levels and a 21% revenue growth for Siemens in the region [14][23] - Germany's export industry also recovered faster than expected, with an 8% increase in top-line growth [23][15] Company Strategy and Development Direction - The company is focusing on core industrial priorities and leveraging digital transformation to empower customers [8][15] - Siemens aims to enhance recurring revenue models, particularly in software and cloud-based services, to improve cash flow stability [55][56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery trajectory, noting the ongoing volatility due to the pandemic and the importance of monitoring market conditions [15][34] - The outlook for fiscal year 2021 was raised, expecting a book-to-bill ratio greater than 1 and mid-to-high single-digit revenue growth [26][46] Other Important Information - The company signed a memorandum of understanding with the Egyptian government for a high-speed rail system, showcasing its commitment to infrastructure development [16][17] - Siemens is experiencing a significant increase in demand for data center solutions, driven by the rise in e-commerce during the pandemic [21] Q&A Session Summary Question: What is the biggest unfinished business or opportunity for the new leadership? - Joe Kaeser emphasized that the new leadership is well-equipped to handle future challenges and opportunities, focusing on organic growth in core areas [52][53] Question: Insights into customer types driving growth in China? - Ralf Thomas noted that growth in China is largely driven by discrete manufacturing, particularly in machinery and automotive sectors, with a significant portion attributed to restocking effects [56][58] Question: Expectations for drop-through margins in the short-cycle part of the DI portfolio? - Ralf Thomas explained that margins are driven by scale and recovery in machinery and automotive, with ongoing cost-out programs contributing positively [70][72] Question: Signals of recovery in industries outside automotive? - Ralf Thomas indicated that while the U.S. process industries remain shaky, there are signs of recovery in electronics, semiconductors, and general machinery [86][87] Question: How is the restocking effect in China developing? - Ralf Thomas mentioned that momentum in January remained strong, with restocking effects still significant, but the full impact will be clearer post-Lunar New Year [82][83] Question: Clarification on Q2 guidance for growth in DI? - Ralf Thomas confirmed that growth momentum in DI is expected to continue, but there are uncertainties regarding the second half of the fiscal year [92][93]