Siemens Energy – Excellent performance of conventional businesses in fiscal year 2023 overshadowed by wind business performance
Excellent performance of majority of Siemens Energy’s businesses overshadowed by wind business – agreement on framework to secure longterm accelerated order growth
In a year of unprecedented challenges for Siemens Energy, two-thirds of our businesses are on a profitable growth trajectory, meeting or exceeding their full-year targets. For our underperforming wind business all eyes must be on cost-out, selectivity and acceleration of productivity while continuously working on the remediation. The current high demand for our products also brings challenges. We are therefore very glad that after very constructive discussions, we have now found a good solution with all parties to secure our energy transition-accelerated growth”, says Christian Bruch, President and CEO of Siemens Energy AG.
Q4 Fiscal Year 2023
- Development in Siemens Energy’s relevant markets continued to be strong, despite an overall subdued economic momentum.
- After several quarters of substantial growth, orders in the fourth quarter declined to €10.6bn and were down 7.8% on a comparable basis (excluding currency translation and portfolio effects) from the high prior-year figure, which was driven by large orders at Grid Technologies (GT). Book-to-bill ratio (ratio of orders to revenue) was well above 1, leading to a record order backlog of €112bn at year-end.
- Revenue of €8.5bn declined by 2.5% on a comparable basis mostly due to Siemens Gamesa.
- Siemens Energy’s Profit before special items was in the expected range with negative €487m (Q4 FY 2022: positive €564m) mainly driven by the loss at Siemens Gamesa. Special items decreased to negative €64m (Q4 FY 2022: negative €105m). Profit for Siemens Energy came in at negative €551m (Q4 FY 2022: positive €459m).
- Accordingly, Siemens Energy showed a Net loss of €870m (Q4 FY 2022: Net income €354m). Corresponding basic earnings per share (EPS) were negative at €1.04 (Q4 FY 2022: positive €0.33).
- Free cash flow pre tax amounted to €1,108m. This was below strong prior-year quarter’s level of €1,949m, primarily due to Siemens Gamesa, which benefited in the prior-year quarter from the sale of its wind farm development portfolio in Southern Europe.
Fiscal Year 2023
- Gas Services (GS), Grid Technologies (GT) and Transformation of Industry (TI) showed an excellent performance throughout the fiscal year, characterized by strong orders, successful project execution and operational improvements leading to increased profitability. On the other hand, there were negative effects at Siemens Gamesa due to quality issues in particular of the 4.X and 5.X onshore turbines as well as increased product costs and ramp-up challenges in the offshore business.
- Regarding the adjusted outlook in the third quarter, Siemens Energy met its guidance. Free cash flow pre tax came in higher than expected.
- Driven by GT and Siemens Gamesa, Siemens Energy’s orders exceeded the high level of the prior fiscal year by 33.8% on a comparable basis and rose to €50.4bn (FY 2022: €38.3bn).
- Revenue of €31.1bn was up by 9.9% on a comparable basis driven by growth in all segments except Siemens Gamesa.
- Siemens Energy’s Profit before special items decreased to negative €2,776m (FY 2022: positive €225m) due to the loss at Siemens Gamesa. Special items amounted to negative €184m (FY 2022: negative €413m) largely related to restructuring costs at Siemens Gamesa and costs in connection with the integration of Siemens Gamesa. Profit for Siemens Energy came in at negative €2,960m (FY 2022: negative €188m).
- Net loss of Siemens Energy was €4,588m (FY 2022: €712m). Corresponding EPS were negative at €5.47 (FY 2022: negative €0.65).
- Free cash flow pre tax decreased to €784m (FY 2022: €1,503m) driven by an increase of the negative Free cash flow pre tax at Siemens Gamesa and a decline of the positive Free cash flow pre tax at GS (from an exceptionally high level) but supported by a strong cash flow at GT primarily due to advance payments from new projects.
Fiscal Year 2024
- For Siemens Energy in fiscal year 2024, we expect comparable revenue growth in a range of 3 % to 7 % and a Profit margin before special items between negative 2 % and positive 1 %. Furthermore, we expect a Net income of up to €1bn including impacts from disposals and the acceleration of the portfolio transformation. Free cash flow pre tax is expected to be around negative €1.0bn. In addition, we expect proceeds in a range of positive €2.5bn to €3.0bn from disposals and the acceleration of the portfolio transformation.
- The decline in orders year-over-year was primarily due to the GT business area, mainly driven by lower volume from large orders and high comparative basis in the fourth quarter of the previous year.
- Book-to-bill ratio came in at 1.24. The order backlog once again exceeded the previous record level and rose to €112bn.
- Revenue decreased moderately primarily due to Siemens Gamesa.
- Service revenue improved moderately compared to prior-year quarter’s level.
- Profit before Special items dropped year-over-year due to Siemens Gamesa’s loss which more than offset positive results in all other segments.
- Special items substantially declined as the prior-year quarter was burdened by charges related to the restructuring of the business activities in Russia.
- All segments recorded a positive Free cash flow pre tax which, however, overall was below the high prior-year quarter’s basis of comparison. This was driven by Siemens Gamesa and GS.
- Orders slightly increased year-over-year benefiting from a large gas turbine order together with a strong development in the service business.
- Book-to-bill ratio was 0.89. The order backlog amounted to €41bn and was nearly on previous quarter’s level.
- Revenue increased moderately with service business and new unit business contributing to this growth.
- Profit before Special items and corresponding margin increased moderately year-over-year. The progress was supported by an improved cost structure and a continued service contribution.
- Orders declined year-over-year due to a considerably lower volume from large orders in the solution business. In the prior fiscal year, three of GT’s largest orders (two offshore wind farm grid connections and a high-voltage direct current (HVDC) transmission system) were received in the fourth quarter.
- GT reported a Book-to-bill ratio of 1.13 with the order backlog rising to €23bn.
- Revenue grew clearly, driven by the product business following its order development.
- Profit before Special items and the corresponding margin rose sharply. The increase was driven by higher volume and project cost improvements. The prior-year quarter was burdened by supply chain related effects
Transformation of Industry
- Significant increase of orders year-over-year was supported by orders in the field of electric LNG and Hydrogen especially in the Sustainable Energy Systems and the Electrification, Automation, Digitalization businesses.
- Book-to-bill ratio was 1.37. The order backlog increased to €7bn.
- Revenue was above prior-year quarter’s level with double-digit growth in service revenue.
- As expected, Profit before Special items declined year-over-year. Positive contributions from an improved business mix due to a higher service share and operational improvements were offset by one-time impacts and currency headwinds.
- Special items related to restructuring costs in connection with divestments and footprint adjustments.
- Moderate order growth was driven by the offshore and service businesses, which were supported by a large order in Taiwan in total worth around €2bn. Onshore orders decreased. On the one hand, this was due to a sales stop for certain onshore platforms related to the known quality issues, and on the other hand, prior-year’s quarter benefited from the sale of the wind farm development portfolio in Southern Europe.
- Book-to-bill ratio came in at 1.63. The order backlog rose to €42bn.
- Revenue declined significantly due to the quality issues in the onshore business and factory load plan changes at the offshore business, while prior-year quarter included the sale mentioned above.
- Profit before Special items was negative, burdened by lower profit contributions from the execution of the order backlog mainly related to previous quarter’s quality issues in the onshore and service businesses as well as increased product costs and continued ramp-up challenges in the offshore activities. Additionally, prior-year’s quarter benefited from income of €565m from the sale mentioned above.
Reconciliation to Consolidated Financial Statements
Reconciliation to Consolidated Financial Statements includes items, which management does not consider to be indicative of the segments’ performance – mainly group management costs (management and corporate functions) and other central items, Treasury activities as well as eliminations. Other central items include Siemens brand fees, corporate services (e.g. management of the Group’s real estate portfolio (except Siemens Gamesa), which was allocated to the Gas and Power segment in the prior year), corporate projects, centrally held equity interests and other items.
The negative change year-over-year in Reconciliation to Consolidated Financial Statements was mainly due to increased costs for corporate functions and other central items. This was offset by a negative onetime effect related to a legacy power plant construction project in the prior-year quarter.
In fiscal year 2024, we expect for Siemens Energy a comparable revenue growth (excluding currency translation and portfolio effects) in a range of 3 % to 7 % (actual figure FY 2023: 9.9 %) and a Profit margin before special items between negative 2 % and positive 1 % (actual figure FY 2023: negative 8.9 %). Furthermore, we expect a Net income of up to €1bn (actual figure FY 2023: Net loss of €4,588m) including impacts from disposals and the acceleration of the portfolio transformation. We assume a negative Free cash flow pre tax of around €1.0bn (actual figure FY 2023: positive €784m). In addition, we expect proceeds in a range of positive €2.5bn to €3.0bn from disposals and the acceleration of the portfolio transformation.
The outlook for Siemens Energy does not include charges related to legal and regulatory matters.
Overall assumptions per business area
- GS assumes a comparable revenue growth of negative 4 % to 0 % (actual figure FY 2023: positive 17.7 %) and a Profit margin before special items of 9 % to 11 % (actual figure FY 2023: 9.5 %).
- GT plans to achieve a comparable revenue growth of 18 % to 22 % (actual figure FY 2023: 16.6 %) and a Profit margin before special items between 7 % and 9 % (actual figure FY 2023: 7.5 %).
- TI expects a comparable revenue growth of 8 % to 12 % (actual figure FY 2023: 12.0 %) and a Profit margin before special items of 5 % to 7 % (actual figure FY 2023: 5.1 %).
- Siemens Gamesa assumes a comparable revenue growth of 0 % to positive 4 % (actual figure FY 2023: negative 5.1 %) and a negative Profit before special items of around €2bn (actual figure FY 2023: negative €4,347m).
Notes and forward-looking statements
The press conference call on Siemens Energy’s financial results of the fourth quarter of fiscal year 2023 will be broadcasted live for journalists at https://www.siemens-energy.com/pressconference starting at 8:30 a.m. CET today.
You can also follow the conference call for analysts and investors live at www.siemens-energy.com/analystcall starting at 11:00 a.m. CET today.
Recordings of both conference calls will be made available afterwards.
The financial publications can be downloaded at: www.siemens-energy.com/q4-fy2023
This document contains statements related to our future business and financial performance, and future events or developments involving Siemens Energy that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. We may also make forward-looking statements in other reports, prospectuses, in presentations, in material delivered to shareholders, and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens Energy´s management, of which many are beyond Siemens Energy´s control. These are subject to a number of risks, uncertainties, and other factors, including, but not limited to, those described in disclosures, in particular in the chapter “Report on expected developments and associated material opportunities and risks” in the Annual Report. Should one or more of these risks or uncertainties materialize, should acts of force majeure, such as pandemics, occur, or should underlying expectations including future events occur at a later date or not at all, or should assumptions not be met, Siemens Energy´s actual results, performance, or achievements may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens Energy neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. This document includes supplemental financial measures – that are not clearly defined in the applicable financial reporting framework – and that are or may be alternative performance measures (nonGAAP-measures). These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens Energy´s net assets and financial position or results of operations as presented in accordance with the applicable financial reporting framework in its consolidated financial statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Fourth quarter of fiscal year 2023
Key figures (in millions of €, except where otherwise stated)
Capital Structure and Liquidity
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
Overview of Segment figures
Orders & Revenue by region (location of customer)
Disaggregation of external revenue of segments
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More information on Siemens Gamesa Renewable Energy, S.A. (SGRE): https://www.siemensgamesa.com/en-int + At Siemens Gamesa, when the wind blows, we see infinite possibilities. 40 years ago, we saw the potential to blend nature and engineering. We envisioned the possibility of powering factories and lighting up cities, all whilst cleaning the air we breathe. Today, we’ve made that vision a reality by producing clean energy to power our homes, schools, and hospitals to keeping us moving all over the world – from the largest cities to the most remote corners of the planet.
We are a team of 28,150 individuals from over 100 nationalities, all motivated to tackle the greatest challenge of our generation – the climate crisis. We’re inspired by the prospect of working in a continuously evolving industry alongside expert colleagues, pushing the boundaries of possibility.
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- Siemens Energy Q4 FY 2023 Earnings Release and Financial Results: https://p3.aprimocdn.net/siemensenergy/e0872591-2bff-46a9-833f-b0ba015a476c/2023-11-15-Earnings-Release-Q4-FY23-EN-pdf_Original%20file.pdf
- Siemens Energy Q4 FY 2023 Presentation Analyst Call: https://p3.aprimocdn.net/siemensenergy/e0c4db0b-48d4-49fc-b421-b0bb0057e5a1/2023-11-15-Analyst-Presentation-Q4-FY23-EN-pdf_Original%20file.pdf
- Siemens Energy Half-year Financial Report 2023: https://assets.siemens-energy.com/siemens/assets/api/uuid:3ff3f27d-ca3a-4866-bd57-53fe6e362040/2023-05-15-half-year-fin
- Siemens Energy Comparable key Figures FY2022: https://assets.siemens-energy.com/siemens/assets/api/uuid:76569361-381b-40d7-9542-d6216f6f1482/2023-02-07-siemens-energy-comparable-key-figures-fy2022.pdf?ste_sid=81e549b0261e3412a9eecb9842be8982
- Siemens Energy Annual Report 2022: https://assets.siemens-energy.com/siemens/assets/api/uuid:2c6beb5b-85ef-4200-a361-6a4550a31b9b/2022-12-12-siemens-energy-ag-annual-report-2022.pdf
- Siemens Energy Annual Report 2021: https://assets.siemens-energy.com/siemens/assets/api/uuid:a400bf27-8ce4-4f48-8f2b-e89a9bd44b64/2021-12-07-siemens-energy-ag-annual-report-2021.pdf
- Siemens Energy Sustainability Report 2022: https://assets.siemens-energy.com/siemens/assets/api/uuid:49bc59fb-7af0-47fc-a764-a3550d4153dc/siemens-energy-sustainability-report-2022.pdf