Siemens India (SIEMENS) Q4 08/09 earnings summary

Executive summary

• Fiscal 2009 revenue held near prior-year levels despite recession; Total Sectors profit rose 13% on lower SG&A, stronger Energy results and improved project execution.

• Income from continuing operations increased 32% to €2.457bn; net income fell 58% to €2.497bn, mainly reflecting lower discontinued-operation income and NSN-related losses.

• Fiscal 2010 guidance calls for mid-single-digit organic revenue decline and Total Sectors profit of €6.0–€6.5bn, with improving markets expected in H2.

Financial highlights

• Revenue was €76.651bn, down 1% reported and flat adjusted for currency and portfolio effects; new orders fell 16% reported and 14% adjusted to €78.991bn.

• Total Sectors profit rose 13% to €7.466bn; income from continuing operations increased 32% to €2.457bn and basic continuing-operations EPS rose 36% to €2.60.

• Net income was €2.497bn versus €5.886bn; basic EPS was €2.65 versus €6.41, with FY08 including substantial discontinued-operation gains.

• Gross margin was 27.0% versus 27.2%; SG&A fell to €10.896bn, or 14.2% of revenue, from €13.586bn, or 17.6%, including prior-year restructuring charges.

• Adjusted EBITDA was €9.524bn, up 11%; continuing-operations adjusted EBITDA was €9.219bn versus €5.585bn.

Outlook and guidance

• FY10 organic revenue is expected to decline at a mid-single-digit rate; Total Sectors profit is forecast at €6.0–€6.5bn and continuing-operations income to rise ~20% YoY.

• Guidance assumes no material pricing deterioration and improving markets in H2 FY10, particularly for short-cycle businesses; restructuring, portfolio, impairment and legal impacts are excluded.

• Organic revenue growth is expected to resume in FY11; Environmental Portfolio revenue target is €25bn for FY11.

• FY10 free cash flow is expected to decline; adjusted industrial net debt/adjusted EBITDA is expected to rise from FY09’s 0.31, with a medium-term target corridor of 0.8–1.0.