X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Siemens: Recouping provisional losses - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Siemens: Recouping provisional losses
May 4, 2009

Performance summary
  • Sales grow by 11% YoY in 2QFY09 (September ending fiscal), decline 1.5% YoY in 1HFY09.
  • Operating margins expand to 14.1% on account of significantly lower raw material cost as also lower costs for purchase of traded goods (as percentage of sales).
  • Net profits multiply during the quarter, rise 180% YoY during the half year period, largely owing to expansion in operating margins.


Standalone financial performance
(Rs m) 2QFY08 2QFY09 Change 1HFY08 1HFY09 Change
Sales 21,424 23,682 10.5% 40,568 39,971 -1.5%
Expenditure 21,394 20,341 -4.9% 39,041 35,038 -10.3%
Operating profit (EBDITA) 30 3,341 11023.8% 1,527 4,934 223.0%
Operating profit margin (%) 0.1% 14.1%   3.8% 12.3%  
Other income 137 178 30.4% 203 2,520 1143.7%
Interest expense/(income) (54) (94) 76.1% (184) (259) 40.6%
Depreciation 149 184 23.6% 300 365 21.9%
Profit before tax 71 3,429 4717.4% 1,615 7,348 355.1%
Extraordinary income/(expense) - -   1,246 -  
Tax 55 1,174 2049.0% 873 1,787 104.6%
Profit after tax/(loss) 17 2,255 13524.0% 1,987 5,561 179.9%
Net profit margin (%) 0.1% 9.5%   4.9% 13.9%  
No. of shares         337.2  
Diluted earnings per share (Rs)*         28.2  
P/E ratio (x)*         11.7  
* On a trailing 12-months basis

What has driven performance in 2QFY09?
  • Siemens reported 10.5% YoY growth in sales for 2QFY09, while for 1HFY09 the company saw a 1.5% decline in sales. The sales for 1HFY08 include about Rs 232 m from discontinued operations, without which sales for 1HFY09 have declined by about 1% YoY. Segment wise, Siemens’ power transmission and power distribution businesses that together contributed to 47% of sales gave some of the better sales performances during the quarter.

    Segment-wise performance (Standalone)
      2QFY08 2QFY09    
    (Rs m) Sales % of total PBIT margins Sales % of total PBIT margins Sales growth Margin change
    Continuing operations                
    Industry Automation 2,608 11.2% 8.8% 2,222 8.6% 6.6% -14.8% -2.3%
    Drive Technology 2,750 11.9% 8.2% 2,947 11.4% 7.4% 7.2% -0.8%
    Building Technologies 213 0.9% 7.0% 208 0.8% 3.2% -2.4% -3.9%
    Industry Solutions 2,881 12.4% 11.8% 2,507 9.7% 9.8% -13.0% -2.0%
    Mobility 1,734 7.5% -5.1% 2,346 9.0% -3.2% 35.3% 1.9%
    Fossil Power Generation (80) -0.3% NA 840 3.2% 6.8% NA NA
    Oil and Gas 1,075 4.6% 10.5% 1,409 5.4% 16.9% 31.1% 6.4%
    Power Transmission 8,621 37.2% 10.4% 9,759 37.6% 21.4% 13.2% 10.9%
    Power Distribution 1,858 8.0% 9.8% 2,297 8.9% 9.9% 23.6% 0.1%
    Healthcare 1,355 5.8% 4.2% 1,223 4.7% 8.9% -9.8% 4.7%
    Real Estate 180 0.8% 45.0% 183 0.7% 78.1% 2.0% 33.1%
    Discontinued Operations - 0.0% NA - 0.0% NA NA NA
    Total* 23,196 100.0% 0.0% 25,941 100.0% 13.1% 11.8% 13.1%
    * Excluding inter-segment adjustments

  • Siemens’ operating margins expanded to 14.1% from 0.1% in 2QFY08 on account of significantly lower raw material cost as also lower costs for purchase of traded goods (as percentage of sales). The power transmission, oil & gas and healthcare business segments saw expansion in their respective PBIT margins during the quarter.

  • Siemens’ net profits saw a stupendous rise of 13,524% YoY during 2QFY09 mainly due to the expansion in operating margins. For the first half too net profits were higher by 180% YoY. The sales and profit figures are strictly not comparable to corresponding quarter of last year. The substantial completion of certain large projects resulted in significant savings in costs previously estimated by the company and consequential recognition of additional revenue and profits. Also the profits for 1HFY09 include a dividend income of Rs 2,113 m from Siemens Information Systems Limited and Rs 117 m from Siemens Information Processing Services Private Limited.

What to expect?
At the current price of Rs 330, the stock is trading at a multiple of 16.7 times our estimated FY11 earnings. Siemens’ order backlog as of March 31, 2009 stood at Rs 97,047 m, an increase of 1% over last year. The company booked orders worth Rs 18.5 bn during the quarter as compared to Rs 23.4 m bn the corresponding quarter of the previous year, thus registering a drop of 21%. For 1HFY09, order inflows registered a drop of 10% and stood at Rs 38.4 bn as compared to Rs 42.5 bn in the corresponding period of last year. The management of Siemens believes that the inherent strengths of the Indian economy and continued focus on infrastructure development will continue to present huge business opportunities for the company. We maintain a cautious view on the stock.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

SIEMENS SHARE PRICE


Jul 18, 2018 12:07 PM

TRACK SIEMENS

  • Track your investment in SIEMENS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

COMPARE SIEMENS WITH

MARKET STATS