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Siemens AG Management Discusses Q3 2012 Results - Earnings Call Transcript

Stocks in this article: SI

Our order intake decreased substantially by 27% from an extraordinary high level of last year, where we booked a much higher volume of large orders in Energy and Transportation & Logistics, including the, if you remember, the EUR 3.7 billion ICx order in Germany. Therefore, our book-to-bill decreased to 0.91, but we expect to see a rebound to above 1 in the fourth quarter. Our backlog remains at EUR 100 billion, supported by translation effects of the weakening euro.

We achieved moderate revenue growth of 3%, driven by continued backlog conversion in Energy and impressive competitive strength in our Healthcare sector. Profitability clearly exceeded the prior year level, which was substantially burdened by the Areva arbitration decision and the particle therapy reevaluation. Fossil and DX delivered strong earnings, however, profitability was impacted by higher OpEx in all sectors and significantly lower contribution from the industrial sector.

As for OSRAM, we stick to our original plans to deconsolidate the asset but changed our primary plans. Since market conditions continue to be highly volatile for an IPO, we decided to pursue a spin-off to our shareholders as the most probable part of divestiture. This option requires shareholder approval at the next AGM in January 2013, and Siemens still intends to remain an anchor shareholder in OSRAM. Though our strategic intent remains the same from an accounting perspective, this results in a significantly negative noncash P&L effect in discontinued operations through a so-called cumulative catch-up of depreciation and amortization related to OSRAM.

For the record, here is the overview of these key figures for the third quarter. These challenges are reflected in our regional split of orders and sales in the third quarter, the lack of large orders, particularly in Energy and the Rail business, compared to a strong prior year weighted on growth rates in Europe and also the U.S. The major driver behind the 28% order decline in the U.S. was the expected expiration of the U.S. tax benefit scheme on renewables, which led already to a sharp decline in new wind orders.

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