Siemens reaffirmed that pick-up in capex is led by T&D, railways, renewables and roads, while capex in other key sectors like defence, power generation & distribution, steel and cement continues to be lackluster. It is well placed to capture the recovery on alignment of its business interests with the government’s vision and higher localization-led improvement in competitive positioning. All these positives and much more are factored in the CMP.
Revenue at R32.3 bn (up 11% y-o-y adjusted for discontinued metals business) was marginally below estimate.
Reported EBITDA margin at 8.5%, below our estimate of 9.2%, was largely led by lower gross margin and higher other expenses (up 22% y-o-y; up 53% q-o-q). Segmental analysis reveals sharp volatility in margin across segments on q-o-q and y-o-y basis, a hallmark of Siemens, and the likelihood of write-backs, especially in the Power and Gas segment. Hence, taking improvement in trends as sustainable may not be entirely correct. Higher than expected other income was compensated by higher tax outgo and accordingly recurring PAT at R1.73 bn (up 17% y-o-y), was 8% below estimate.
FY15’s order inflow at R101 bn, was down 2% y-o-y led by a decline in Power & gas (down 25% y-o-y) and Energy management (down 13% yoy) segments. The mobility segment reported robust inflow (up 121% y-o-y), led by a R4.5 bn order from DLW for propulsion and control equipment. Other segments that reported steady growth (10-15%) were Building Technologies, Digital Factory, and Process Industries and Drives.
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