Credit: Shutterstock photoIndustrial goods manufacturer Siemens AG ( SI ) reported second quarter fiscal 2013 net income of $1.36 billion (€1.03 billion) or $1.56 per share (€1.18) compared to $1.24 billion (€0.94 billion) or $1.35 per share (€1.02) in the year-earlier quarter. Although earnings increased on a year-over-year basis, it missed the Zacks Consensus Estimate of $1.92.
Total revenue in the reported quarter declined 7% year over year to $23.79 billion (€18.01 billion), primarily due to 4% year-over-year drop in revenues from the emerging markets as weak investor sentiments continued due to challenging macroeconomic environment. On a regional basis, revenues decreased significantly in the Americas and moderately in the region comprising Europe, the Commonwealth of Independent States, Africa and the Middle East (Europe/CAME) and in the Asia, Australia region. However, orders improved 3% year over year to $28.33 billion (€21.45 billion) as Siemens won major long-cycle contracts for wind power and trains. The book-to-bill ratio for the quarter was 1.19, while order backlog stood at $133.39 billion (€101 billion) at quarter-end.
Segment Results
In the Energy sector, Siemens recorded a 9% year-over-year decline in revenues due to lower Fossil Power Generation and Wind Power revenues. On a geographic basis, revenue decreased considerably in the Americas. The segment profit for the reported quarter was down 4% year over year to $727.71 million (€551 million).
Healthcare sector profit increased 4.9% to $587.71 million (€445 million) led by commendable performances in the imaging and therapy systems businesses. Revenues declined 2% year over year, driven by lower revenues from Europe/ CAME and the Americas.
In the Industry sector, revenues were down 9% year over year in the quarter due to lower top-line growth in all geographic regions. Sector profit plunged 47% year over year to $432.24 million (€350 million) due to lower capacity utilization and a less favorable business mix.
Infrastructure & Cities sector recorded a 5% year-over-year revenue decline as both Europe/CAME and the Americas posted lower revenues. Sector profit plummeted a staggering 90% year over year to $35.66 million (€27 million) due to higher project charges in the Transportation & Logistics division.
Balance Sheet and Cash Flow
In the reported quarter, free cash flow from continuing operations was $1.82 billion (€1.375 billion). Siemens raised new long-term debt aggregating $4.62 billion (€3.5 billion), denominated in both euros and the U.S. dollar, with maturities ranging from 2018 to 2028.
Cash and cash equivalents at quarter-end were $10.42 billion (€7.89 billion) while long-term debt was $26.65 billion (€20.18 billion).
Outlook
In fiscal 2013, Siemens is implementing a company-wide program titled "Siemens 2014" to support a uniform single framework for sustainable value creation. Income from continuing operations in fiscal 2013 is expected to be €4.5 billion.
Siemens presently has a Zacks Rank #3 (Hold). Other players in the industry worth reckoning include Cubic Corporation ( CUB ), Universal Electronics Inc. ( UEIC ), and Analogic Corporation ( ALOG ), each carrying a Zacks Rank #2 (Buy).
Note: 1 € = $1.3207 (period average from Jan 1, 2013 to Mar 31, 2013)
One Siemens ADR corresponds to one Siemens share.
ANALOGIC CORP (ALOG): Free Stock Analysis Report
CUBIC CORP (CUB): Free Stock Analysis Report
SIEMENS AG-ADR (SI): Free Stock Analysis Report
UNIVL ELECTRS (UEIC): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
