Siemens' second quarter of 2021 is characterized by a jump in profits: Profit after tax jumped from €697 million to €2.390 billion in the comparative period of 2020 to 2021. Order intake grew on a comparable basis by 11% from EUR 14.664 billion in Q2/2020 to EUR 15.879 billion in Q2/2021. Sales revenue amounted to EUR 13.784 billion in the same period of 2020 and EUR 14.665 billion in Q2/2021. "Our customers have great confidence in us. This is impressively demonstrated by the order situation and revenue in the second quarter," said a delighted Roland Busch, CEO of Siemens AG.

Rising profit expectations

When presenting its figures for the first quarter of 2021 on February 3, the Group announced year-on-year growth in almost all segments and raised its annual forecast from an expected profit after tax to a range of EUR 5.0 to 5.5 billion. The trend continued in the 2nd quarter. CFO Ralf P. Thomas: "Growth impetus came in particular from the automotive industry, mechanical engineering and our software business as well as, geographically speaking, from China. In addition to the pleasing margin development in the Industrial Businesses, our successful portfolio management also paid off. In addition, Siemens once again achieved an excellent cash flow. On this basis, we are even more confident about the second half of our fiscal year and are significantly raising our outlook for both the Industrial Businesses and profit after tax." For these reasons, the Group is once again significantly raising its profit expectations after tax to a range of €5.7 billion to €6.2 billion.

Profit push through sale of Flender

However, the sale of Flender also contributed to the jump in profits. The Siemens Mechanical Drives division was launched on the market as an independent company under this name on October 1, 2017. In October 2020, Siemens announced that it would sell the specialist for mechanical and electrical drive systems to the Carlyle Group. The transaction was successfully completed in March and Siemens recorded a gain on disposal of €0.9 billion.

Industrial business with double-digit growth

Despite the good performance in the first two quarters of the financial year, the Group points out in its press release that the general conditions remain challenging, which are characterized by the coronavirus pandemic and negative currency effects, among other things.

Adjusted EBITA in the Industrial Business increased significantly by 31% to EUR 2.1 billion. The adjusted EBITA margin of the Industrial Businesses was 15.1% (Q2 2020: 12.1%). Siemens increased its free cash flow in the past quarter from €134 million in Q2/2021 to €1.2 billion (Q2/2021).

Digital Industries with 14% sales growth

Digital Industries' revenue increased by 14% on a like-for-like basis to €4.031 billion, with the strongest contribution coming from the short-cycle businesses. This was primarily due to the continued recovery in demand in the automotive and mechanical engineering industries. On a comparable basis, incoming orders increased by 8% to EUR 4.321 billion. Growth extended across all reporting regions. Driven by China, Asia and Australia recorded the highest growth rates.

Adjusted EBITA rose by 39% to 811 million euros in the quarter. The increase was mainly driven by the EDA software business (Electronic Design Automation) and the short-cycle businesses. At 20.1%, the adjusted EBITA margin was significantly higher than in the previous year (Q2 2020: 15.9%)

Cost reductions due to the coronavirus restrictions and the adjusted and improved cost structure also had a positive impact. However, the ongoing measures to improve the cost structure led to a very sharp year-on-year increase in personnel restructuring expenses.

For the 2021 financial year, the sector expects revenue to increase by between 9% and 11% year-on-year on a comparable basis. The expectation for the adjusted EBITA margin is now 20 to 21%, one percentage point higher than previously.

10 % growth for smart infrastructure

At Smart Infrastructure, incoming orders rose by 10% on a comparable basis to EUR 4.001 billion. This development was driven by all divisions, with the strongest growth coming from the systems and software business as well as the product business. At 3.562 billion euros, sales revenue recorded an increase of 6% on a comparable basis. Adjusted EBITA more than doubled to 390 million euros compared to 185 million euros in the previous year. All divisions contributed to this strong performance, as did cost savings and higher capacity utilization. The adjusted EBITA margin rose to 11.0% compared to 5.2% in the previous year.

Adjusted EBITA and profitability increased in all businesses, largely due to lower expenses for personnel restructuring, higher capacity utilization, cost savings as a result of the implementation of the competitiveness program and cost reductions due to corona restrictions.

Sales revenue growth of 5% to 7% is expected to be achieved on a comparable basis in the 2021 financial year. The adjusted EBITA margin is now expected to be between 11% and 12%, half a percentage point higher than previously.

Mobility with increase in sales and decline in orders

In Mobility, sales revenue rose by a comparable 3% to EUR 2.271 billion, while incoming orders fell by 8% to EUR 2.127 billion. This decline is primarily due to the postponement of orders to the second half of the year. Incoming orders included a EUR 0.3 billion order for locomotives in the USA and a EUR 0.1 billion order for signaling infrastructure in the UK. The comparative basis in Q2/2020 included a higher volume of major orders.

Nevertheless, both adjusted EBITA and the adjusted EBITA margin were almost on a par with the strong prior-year quarter at EUR 208 million and 9.2% respectively.

For the current financial year, sales are still expected to increase on a like-for-like basis in the mid-single-digit percentage range and the adjusted EBITA margin is expected to be between 9.5% and 10.5%.