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: Back on recovery track? - 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: Back on recovery track?
Nov 25, 2010

Siemens has announced its FY10 results. The company has reported 11% YoY growth in top line. However, net profits declined 21% YoY during the year. Here is our analysis of the results.

Performance summary
  • Sales grow by 11% YoY in FY10 (September ending fiscal).
  • Operating margins expand by 1.7% on account of a decline in overall expenditure as a percentage of sales.
  • Net profits fall 21% YoY during the year owing to a presence of extraordinary income during FY09. Excluding the effect of this income, profits fall by 1% YoY during the year, largely due to a higher effective tax rate.
  • Board has recommended a dividend of Rs 5 per equity share.


Standalone financial performance
(Rs m) FY09 FY10 Change 9mFY09 9mFY10 Change
Sales 83,888 93,152 11.0% 59,067 63,114 6.9%
Other operating income  697 848 21.7%      
Expenditure 74,353 81,069 9.0% 51,643 54,788 6.1%
Operating profit (EBDITA) 10,232 12,932 26.4% 7,424 8,326 12.2%
Operating profit margin (%) 12.2% 13.9%   12.6% 13.2%  
Other income 2,341     2,679 604 -77.5%
Interest expense/(income) 464 670 44.4% (377) (486) 28.7%
Depreciation 778 1,015 30.5% 565 714 26.5%
Profit before tax 12,259 12,587 2.7% 9,916 8,702 -12.2%
Extraordinary income/(expense) 2,059     2,106 -    
Tax 3,870 4,315 11.5% 3,091 2,944 -4.7%
Profit after tax/(loss) 10,449 8,272 -20.8% 8,931 5,758 -35.5%
Net profit margin (%) 12.5% 8.9%   15.1% 9.1%  
No. of shares   337.2   337.2 337.2  
Diluted earnings per share (Rs)*   24.5     21.6  
P/E ratio (x)*   32.2     33.4  

What has driven performance in FY10?
  • Siemens reported 11% YoY growth in sales for FY10. Rise in the business volumes of Siemens’ healthcare, automation and oil & gas segments drove the topline during the year. However, the performance of fossil power generation and real estate segment was a dampener as it saw a 69% YoY and 18% YoY fall in sales.

    Segment-wise performance (Standalone)
      FY09 FY10    
    (Rs m) Sales % of total PBIT margins Sales % of total PBIT margins Sales growth Margin change
    Continuing operations                
    Industry Automation 5,430 6% 8.6% 6,777 7% 9.3% 25% 0.7%
    Drive Technology 11,682 13% 6.3% 13,772 13% 7.9% 18% 1.6%
    Building Technologies 5,043 5% 3.8% 5,794 6% 4.0% 15% 0.2%
    Industry Solutions 11,497 12% 9.3% 11,890 11% 9.2% 3% -0.1%
    Mobility 10,260 11% -0.7% 10,208 10% 8.4% -1% 9.2%
    Fossil Power Generation 4,228 5% 10.4% 1,295 1% 30.9% -69% 20.4%
    Oil and Gas 5,631 6% 14.4% 7,044 7% 13.3% 25% -1.1%
    Power Transmission 24,719 26% 16.2% 29,225 28% 17.8% 18% 1.6%
    Power Distribution 8,842 9% 7.4% 9,506 9% 5.6% 8% -1.8%
    Healthcare 5,431 6% -76.0% 7,537 7% 6.9% 39% 82.9%
    Real Estate 653 1% 129.3% 536 1% 80.8% -18% -48.4%
    Total* 93,416 100.0% 2.5% 103,584 100.0% 11.5% 10.9% 9.0%
    * Excluding inter-segment adjustments

  • Siemens’ operating margins expanded to 13.9% in FY10 from 12.2% in FY09 on account of decline in raw material cost, during the year. The fossil power generation and health care business segments, with a big rise in PBIT margins, contributed towards the overall margin expansion during the year.

  • Siemens’ net profits witnessed a fall of 21% YoY during FY10. This was due to a onetime extraordinary gain in the last fiscal. Excluding the effect of this, profits declined by 1% YoY during the year. Rise in tax rate from 32% in FY09 to 34% in FY10 also led to overall margin erosion.

What to expect?
At the current price of Rs 789, the stock is trading at a multiple of 27 times our estimated FY12 earnings. Considering expensive valuations, we continue to maintain a cautious view on the stock (Research Pro subscribers kindly click here).

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 21, 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 - SHANGHAI ELEC. COMPARISON

COMPARE SIEMENS WITH

MARKET STATS