Siemens(US:SIEGY)2020-05-08 13:44Financial Data and Key Metrics Changes - Siemens reported a revenue decline of 1% in fiscal Q2, primarily due to lower demand in short-cycle industry-related businesses in Digital Industries and Smart Infrastructure, partially offset by growth in Mobility and Siemens Healthineers [12][33] - The operational margin improved to 12.1%, reflecting a strong performance despite adverse conditions [13] - The company adjusted its top-line outlook and refrained from providing EPS guidance due to the uncertain macroeconomic environment [9][34] Business Line Data and Key Metrics Changes - Digital Industries: Order growth of 2% was driven by customer-driven safety stocking effects, particularly in China, while revenue declined significantly due to lower demand in discrete automation and process automation [23][24] - Smart Infrastructure: Revenue decreased by 1%, with a solid book-to-bill ratio of 1.08, but faced challenges from project delays and lower demand in solutions and services [26] - Mobility: Achieved a revenue growth of 6%, supported by large rolling stock projects, with a solid margin of 9.3% [27] Market Data and Key Metrics Changes - The company observed a significant decline in economic output and customer demand globally due to COVID-19, particularly affecting core verticals like automotive and machine building [9][10] - In China, there was a notable downturn in January and February, followed by a recovery in March, indicating a mixed outlook for demand [9][71] Company Strategy and Development Direction - Siemens is focused on executing its Vision 2020+ plan, which includes a strategic spin-off of Siemens Energy, expected to be completed by the end of fiscal 2020 [13][34] - The company aims to drive further margin expansion and has intensified cost reduction measures across its businesses, targeting €475 million in cost reductions by fiscal 2021 [16] - Siemens is positioning itself to capitalize on midterm opportunities arising from the crisis, particularly in automation and digitalization [10][35] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding the macroeconomic developments beyond Q3 and acknowledged the challenges posed by COVID-19 on business operations [9][33] - Despite current challenges, management remains confident in the company's ability to emerge stronger from the crisis, leveraging its strengths in automation and digitalization [10][35] Other Important Information - The company has a healthy financial position with net available liquidity of €11.4 billion and has paused its share buyback program in light of the upcoming spin-off [31][32] - Siemens Financial Services experienced an increase in COVID-19 related credit hits but is expected to stabilize moving forward [30] Q&A Session Summary Question: Clarification on software order growth and demand - Management clarified that Digital Industries saw a 2% growth in new orders, primarily driven by restocking effects, with strong momentum in the semiconductor business [40][41] Question: Future of Siemens Financial Services post-spin-off - Management indicated that Siemens Financial Services will operate at arm's length from Siemens Energy, maintaining a solid structure to cater to market needs [45][49] Question: Mobility performance and revenue impact - Management noted that Mobility achieved strong revenue growth in Q2, but access to customer sites remains a challenge, potentially delaying milestone payments [52][54] Question: Customer behavior in construction projects - Management highlighted that while there are delays in order intake, critical infrastructure projects continue to see demand, particularly in healthcare and data centers [60][64]