Siemens has announced its 3QFY10 results. The company has reported a 17% YoY and 23% YoY growth in sales and net profits respectively. Here is our analysis of the results.
Performance summary
- Sales grow by 17% YoY in 3QFY10 (September ending fiscal).
- Operating margins contract by 2.7% on account of a significantly higher cost of traded goods, and other expenditure (as percentage of sales).
- Net profits fall 54% YoY during the quarter owning to extraordinary income during the
- 3QFY09. Excluding the effect of this income, profits grow by 23% YoY during the quarter, largely due to a lower effective tax rate.
Standalone financial performance
(Rs m) |
3QFY09 |
3QFY10 |
Change |
9mFY09 |
9mFY10 |
Change |
Sales |
19,096 |
22,349 |
17.0% |
59,067 |
63,114 |
6.9% |
Expenditure |
16,606 |
20,044 |
20.7% |
51,643 |
54,788 |
6.1% |
Operating profit (EBDITA) |
2,490 |
2,305 |
-7.4% |
7,424 |
8,326 |
12.2% |
Operating profit margin (%) |
13.0% |
10.3% |
|
12.6% |
13.2% |
|
Other income |
159 |
115 |
-27.8% |
2,679 |
604 |
-77.5% |
Interest expense/(income) |
(118) |
(181) |
52.5% |
(377) |
(486) |
28.7% |
Depreciation |
199 |
249 |
25.1% |
565 |
714 |
26.5% |
Profit before tax |
2,568 |
2,351 |
-8.5% |
9,916 |
8,702 |
-12.2% |
Extraordinary income/(expense) |
2,106 |
- |
|
2,106 |
- |
|
Tax |
1,304 |
790 |
-39.4% |
3,091 |
2,944 |
-4.7% |
Profit after tax/(loss) |
3,370 |
1,561 |
-53.7% |
8,931 |
5,758 |
-35.5% |
Net profit margin (%) |
17.6% |
7.0% |
|
15.1% |
9.1% |
|
No. of shares |
|
|
|
337.2 |
337.2 |
|
Diluted earnings per share (Rs)* |
|
|
|
|
21.6 |
|
P/E ratio (x)* |
|
|
|
|
33.4 |
|
* On a trailing 12-months basis
What has driven performance in 3QFY10?
- Siemens reported 17% YoY growth in sales for 3QFY10, while for 9mFY10 the company saw a 7% rise in sales. Segment wise, a rise in the business volumes of Siemens’ industry healthcare, distribution and oil & gas segments drove the topline growth during the quarter. However, the mobility business was the dampener during 3QFY10 as it saw a 35% YoY fall in sales and contributed 7% to the overall topline.
Segment-wise performance (Standalone)
|
3QFY09 |
3QFY10 |
|
|
(Rs m) |
Sales |
% of total |
PBIT margins |
Sales |
% of total |
PBIT margins |
Sales growth |
Margin change |
Industry Automation |
1,205 |
6% |
6.6% |
1,526 |
6% |
9.3% |
27% |
2.7% |
Drive Technology |
2,360 |
11% |
6.9% |
3,156 |
13% |
2.2% |
34% |
-4.8% |
Building Technologies |
1,144 |
5% |
3.4% |
1,434 |
6% |
0.8% |
25% |
-2.6% |
Industry Solutions |
2,331 |
11% |
7.3% |
2,923 |
12% |
12.4% |
25% |
5.2% |
Mobility |
2,742 |
13% |
3.7% |
1,777 |
7% |
4.2% |
-35% |
0.5% |
Fossil Power Generation |
750 |
4% |
12.4% |
255 |
1% |
2.0% |
-66% |
-10.3% |
Oil and Gas |
1,294 |
6% |
18.3% |
1,577 |
6% |
1.3% |
22% |
-17.1% |
Power Transmission |
5,879 |
28% |
22.1% |
8,196 |
33% |
13.7% |
39% |
-8.3% |
Power Distribution |
1,901 |
9% |
1.5% |
1,980 |
8% |
6.8% |
4% |
5.3% |
Healthcare |
1,137 |
5% |
-0.4% |
1,926 |
8% |
6.6% |
69% |
6.9% |
Real Estate |
151 |
1% |
115.8% |
124 |
0% |
80.4% |
-18% |
-35.4% |
Total* |
20,892 |
100.0% |
11.4% |
24,875 |
100.0% |
8.7% |
19.1% |
-2.7% |
* Excluding inter-segment adjustments
- Siemens' operating margins contracted to 10.3% from 13% in 3QFY10 on account of significantly higher costs for goods purchased for trading, as also higher other expenditure during the period (as percentage of sales). The drive technology and oil & gas business segments, with a big fall in PBIT margins, contributed towards the overall contraction in margins during the quarter.
- Siemens' net profits witnessed a fall of 54% YoY during 3QFY10. This was due to a onetime extraordinary gain in the same quarter of last fiscal. On excluding the same, profits grew by 23% during the quarter. For the first nine months, net profits were lower by 35% YoY. However, if one were to remove the extraordinary dividends received by the company from its erstwhile subsidiaries during 9mFY09, profits for the half year period fell by a lesser 16% YoY.
What to expect?
At the current price of Rs 721, the stock is trading at a multiple of 23.4 times our estimated FY12 earnings. Siemens' order backlog as at the end of June 2010 stood at Rs 135 bn, an increase of 34% over last year. The company booked orders worth Rs 94 bn during the nine months, thus registering an increase of 52% YoY over 9mFY09. The company has seen a strong growth in short cycle business (products) over the last nine months of FY10. It also has a robust order backlog from its long cycle projects business which will help the company going forward. However, we continue to maintain a cautious view on the stock (Research Pro subscribers kindly click
Here).