Back in March, Siemens announced that it no longer wanted to do any new business with Russia due to Russia's invasion of Ukraine. Now the company is withdrawing completely from the country. "This was not an easy decision. Despite our clear stance on this war. After all, we have been operating in Russia for 170 years. We have close ties to our customers. And we bear responsibility for our 3,000 colleagues, who - I would like to make this clear - we will continue to support to the best of our ability even after this decision. The decision is already being implemented. We have started to wind up the remaining operations and all industrial business activities," commented CEO Roland Busch on the market exit. Russia accounted for around 1% of Siemens ' sales.

In the second quarter of the current fiscal year, the Russian sanctions had a total impact on earnings of €600 million due to impairments and other charges, mainly in Mobility. The Group has also initiated an orderly reduction of industrial business activities to exit the Russian market.

The quarterly result in detail

On a comparable basis, incoming orders increased by 22% to EUR 21.0 billion (Q2/2021: EUR 15.9 billion). The order backlog stands at EUR 94 billion. The Group was also able to increase sales by 7% to EUR 17.0 billion (Q2/2021: EUR 14.7 billion). Earnings from industrial business fell from EUR 2.0 billion in Q2/2021 to EUR 1.2 billion in Q2/2022 and, as mentioned above, were impacted by EUR 600 million as a result of the sanctions imposed on Russia. In addition, the prior-year quarter recorded a one-off gain of EUR 0.9 billion within discontinued operations from the sale of Flender.

Profit after tax halved to €1.2 billion, while free cash flow at Group level rose by €100 million year-on-year to €1.3 billion.

Despite the current developments, Siemens is sticking to its forecast of 6% to 8% growth. The financial targets are based on the assumption of continued growth in global gross domestic product and that challenges for our businesses from COVID-19 and supply chain bottlenecks will not worsen in the remainder of fiscal 2022. Under these conditions, the Group expects the industrial business to continue to grow profitably. Profit after tax in the 2021 financial year included a positive contribution from sales and other portfolio-related gains totaling EUR 1.5 billion. The Group expects to achieve a positive contribution to earnings from portfolio-related issues in a similar amount for the 2022 financial year, after deducting the charges in connection with Russia.

Factory automation and Moiton Control as growth drivers

Digital Industries' order intake increased by a total of 32% on a like-for-like basis to EUR 5.9 billion. This growth extends across all areas. Sales revenue also increased on a like-for-like basis by a total of 9% to EUR 4.6 billion. Growth impetus came from China and Europe. The strongest contribution to incoming orders and sales came from the Factory Automation and Motion Control businesses.

Compared to the same quarter of the previous year, earnings rose by 2% to 826 million euros, with an earnings margin of 18.1%. Profitability was mainly impacted by lower revenue in the software business and higher expenses for cloud-based activities, including the effects of the accelerated transition of parts of the business to Software-as-a-Service (SaaS), which saw strong customer demand in the second quarter.

Digital Industries continued to implement the extraordinarily high order intake as far as possible within the capacity and delivery restrictions. Although major disruptions to the supply chain were successfully avoided, delivery times for some automation products were extended.

Smart Infrastructure with growth in the USA

Order intake in the Smart Infrastructure sector rose by 22% to EUR 5.0 billion. This strong growth is attributable to the US market, including major orders for data centers and digital building services. On a comparable basis, sales grew by 8% to EUR 4.0 billion across all businesses, with the Electrical Products business making the largest contribution. Earnings rose by 15% to EUR 445 million compared to EUR 386 million in the same quarter of the previous year. The earnings margin rose to 11.1% compared to 10.8% in the second quarter of 2021.

Major orders for Mobility

Mobility increased its order intake on a comparable basis by 13% to € 2.5 billion due to a higher volume of major orders, while sales revenue fell by 9% to € 2.1 billion. Due to the sanctions imposed on Russia, sales development was affected in particular in the rail vehicle and customer service business by a reduction in sales revenue of EUR 0.2 billion realized in previous periods. In addition, sales revenue for services rendered in the second quarter could not be recognized. As a result of the sanctions against Russia, earnings were impacted by impairments and other charges of around EUR 600 million; Mobility recorded a total loss of EUR 369 million; excluding Russia-related charges, the earnings margin amounted to 8.4%.