Siemens shares higher on better-than-expected earnings

Investing.com -- Shares of Siemens AG (OTC:SIEGY ) jumped on Thursday after it beat expectations in Q4, reporting a 7% profit beat driven by robust performance across key industrial segments, most notably its Digital Industries (DI) division. 

At 3:09 am (0809 GMT), Siemens (ETR:SIEGn ) AG was trading 4.4% higher at €187.18.

Siemens recorded adjusted profits across its industrial businesses that were 4% ahead of consensus expectations, with strong quarterly contributions from software sales offsetting softer automation demand.

Revenue for Siemens’ core industrial businesses came in line with forecasts, while adjusted profits beat estimates by 7%. This strong performance was fueled by improved margins, with industrial profit margins hitting 15.5% in Q4 compared to a 14.8% consensus. 

The DI segment posted a 16% profit beat, with a margin lift of around 200 basis points. This gain was due to solid software demand, which helped boost DI's margin to 18.9% for the year, above the anticipated 18.4%.

RBC Capital Markets in anote said that Siemens' sales projections for 2025 start from a fiscal year base that is slightly above consensus by about 0.3%. 

While Siemens indicated that software growth may not contribute significantly to revenue following its strong performance in 2024, underlying momentum in the software segment remains positive, with potential for margin improvement.

In addition to profit growth, Siemens reported higher-than-expected cash flow, with free cash flow (FCF) reaching €5.0 billion in Q4, well ahead of the €4.2 billion analysts had forecasted. 

Orders also exceeded expectations, growing by 10% compared to an anticipated decline, leading to a book-to-bill ratio of 1.10x, reflecting continued demand for Siemens’ products and services.

Looking at divisional performance, DI orders came in at €4.3 billion, ahead of consensus expectations of €4.1 billion. Within this division, software revenue saw a modest 4% increase, countering a more substantial 18% decline in automation. 

Regionally, the U.S. and China markets posted year-over-year growth, while Europe remained soft. Siemens’ Smart Infrastructure (SI) division also outpaced projections, with orders reaching €6.1 billion and growth across sectors, particularly in datacenters and energy, leading to margins 80 basis points higher than expectations.

The Mobility division saw a standout quarter, driven by €1.2 billion in large orders, which led to a 40% beat on orders. 

"We think automation orders will continue to hovver around this level with a potentially more
pronounced order inflection in coming quarters," said analysts at Stifel in a note.

In contrast, Siemens Healthineers delivered results largely in line with estimates, rounding out steady performance across all divisions.

Siemens’ outlook for fiscal year 2025 indicates the company remains on track to meet or slightly exceed consensus expectations, with EPS guidance in the €10.40-11.00 range, marginally above the consensus of €10.65.

Siemens is forecasting 3-7% revenue growth in 2025, along with stable book-to-bill ratios above 1x. The DI division, though projected to face challenges in automation, is expected to maintain positive software momentum and achieve margins within the 15-19% range. 

SI’s outlook is also solid, with revenue growth anticipated at 6-9% and margins in line with the broader market consensus.

Source: Investing.com