14 November 2024
If you are covering Siemens’ full year 2024 results, please find commentary below from Jarek Pominkiewicz, industrials analyst at Quilter Cheviot:
“Siemens has delivered a solid set of Q4 2024 results, with group profit orders, profit, and free cash flow all ahead of consensus expectations.
“The FY25 guidance is in line, reflecting robust performance in both the infrastructure and electrification segments. However, the soft backdrop in automation remains a concern. Management has noted that while automation orders in China have stabilised, there has been a sequential weakening in Germany, and overall industrial end markets have not shown upward momentum.
“Despite limited visibility, we remain confident in a recovery for Digital Industries (DI) once the severe inventory destocking concludes.
“Industrial order intake increased by 11% organically, coming in 8% ahead of consensus, driven mainly by strong performance in Mobility, Smart Infrastructure, and a positive surprise in Digital Industries. Despite a still-soft backdrop in discrete automation and weak industrial momentum in Germany, orders declined by only 6% year-on-year and were 4% ahead of consensus.
“Operating profit for the industrial business was €20.2bn, up 1% organically and flat against consensus, with softness in Digital Industries offset by growth in other segments. Industrial business profit, excluding severance, declined by 9% year-on-year to €3.2bn, which was 4% ahead of consensus, resulting in a margin of 15.9%. This beat was mainly driven by better-than-expected performance in Digital Industries.
“Free cash flow increased by 7% year-on-year to €5.0bn, demonstrating strong cash conversion across all businesses. Management’s FY24/25 guidance includes like-for-like revenue growth of 3% to 7%.
“Siemens currently trades at about 16 times FY25 earnings, which is broadly in line with its 10-year average but at a significant discount to other European industrial names trading at 21 times earnings. This valuation presents an attractive opportunity for investors considering Siemens’ strong fundamentals and growth prospects."
