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: Top up, bottom down - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

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

Siemens: Top up, bottom down
Aug 8, 2011

Siemens has announced the third quarter results of financial year 2010-2011 (3QFY11). The company has reported 24.3% YoY growth in sales. However, net profits have declined 0.9% YoY during the quarter. Here is our analysis of the results.

Performance summary
  • Sales grow by 24.3% YoY in 3QFY11 (September ending fiscal).
  • Operating margins decline to 9.0% in 3QFY11 on account of rise in overall expenditure as a percentage of sales.
  • Bottom line declined 0.9% YoY due to higher depreciation expenses and modest operating performance during the quarter. Other income (profit on sale of subsidiaries) supported profitability in 3QFY11. Adjusting for these exceptional gains, profits declined 2.2% YoY.
  • As of 30 June 2011, the unexecuted order back log of the company stood at Rs 149.6 bn. During the quarter, the company registered an order inflow of Rs 22.8 bn.

Standalone financial performance
(Rs m) 3QFY10 3QFY11 Change 9MFY10 9MFY11 Change
Sales 22,349 27,785 24.3% 63,144 83,836 32.8%
Other operating income 115 183 59.7% 603 1,143 89.5%
Expenditure 20,044 25,465 27.0% 54,788 74,378 35.8%
Operating profit (EBDITA) 2,420 2,503 3.5% 8,960 10,601 18.3%
Operating profit margin (%) 10.8% 9.0%   14.2% 12.6%  
Interest income, net 181 165 -8.4% 456 532 16.7%
Other income   21     21  
Depreciation 249 401 60.7% 714 1,112 55.8%
Profit before tax 2,351 2,288 -2.7% 8,702 10,041 15.4%
Tax 790 741 -6.2% 2,944 3,368 14.4%
Profit after tax/(loss) 1,561 1,548 -0.9% 5,757 6,673 15.9%
Net profit margin (%) 7.0% 5.6%   9.1% 8.0%  
No. of shares         340.3  
Basic & Diluted earnings per share (Rs)*          27.2  
P/E ratio (x)*         32.8  
* On a trailing 12 months basis

What has driven performance in 3QFY11?
  • Siemens reported 24.3% YoY growth in sales during 3QFY11. Rise in the business volumes of Siemens' Oil & Gas, Fossil Power generation and Building Technologies segments drove the topline during the quarter. However, the performance of Power Transmission and Mobility segments was a bit of a disappointment.
  • Segment-wise performance (Standalone)
      3QFY10 3QFY11    
    (Rs m) Sales % of total PBIT margins Sales % of total PBIT margins Sales growth Margin change
    Continuing operations
    Industry Automation 1,526 6% 9.3% 2,082 7% 7.9% 36% -1.4%
    Drive Technology 3,156 13% 2.2% 3,662 12% 8.5% 16% 6.3%
    Building Technologies 1,434 6% 0.8% 2,214 7% 5.5% 54% 4.7%
    Industry Solutions 2,923 12% 12.4% 3,052 10% 2.5% 4% -9.9%
    Mobility 1,777 7% 4.2% 1,266 4% 9.4% -29% 5.2%
    Fossil Power Generation 255 1% 2.0% 1,510 5% -5.7% 491% -7.7%
    Oil and Gas 1,677 7% 1.2% 3,397 11% 9.9% 103% 8.7%
    Power Transmission 8,196 33% 13.7% 7,438 25% 12.5% -9% -1.2%
    Power Distribution 1,980 8% 6.8% 2,448 8% 1.0% 24% -5.8%
    Healthcare 1,926 8% 6.6% 2,509 8% 1.3% 30% -5.3%
    Real Estate 124 0% 80.4% 162 1% 58.1% 30% -22.3%
    Total* 24,975 100.0% 8.7% 29,740 100.0% 7.1% 19.1% -1.6%
    * Excluding inter-segment adjustments

  • Siemens' operating margins declined to 9.0% in 3QFY11 from 10.8% in 3QFY10 on account of rise in overall expenditure as a percentage of sales. The Industry automation, Fossil Power generation, Power Distribution and Healthcare segments with a big fall in PBIT margins, contributed towards the overall margin erosion during the quarter.

  • Siemens' net profits witnessed a decline of 0.9% YoY during 3QFY11. Adjusting for the exceptional gain on profit from sale of subsidiaries, net profits declined 2.2% YoY. Rise in depreciation expenses (60.7% YoY) and fall in interest income (8.4% YoY) dented the profitability growth.

What to expect?

At the current price of Rs 892, the stock is trading at a multiple of 24 times our estimated FY13 earnings. The company expects to register a growth of 20% in the next fiscal. Further, it is also exploring opportunities in replacement and green-field businesses. Nonetheless, considering the expensive valuations, we continue to maintain out negative 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


Feb 23, 2018 (Close)

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

SIEMENS - EASUN REYROLLE COMPARISON

COMPARE SIEMENS WITH

MARKET STATS