Siemens Witnesses Improved Profitability In March 2014 Quarter

Siemens which is one of the largest companies in the field of electronics and electrical engineering segment announced it March 2014 quarter results. Unlike the other companies, which usually have a March year ending, Siemens closes its books in September quarter. Hence the March quarter is a half year period for the company (H1). If we take a superficial look at the performance of the company, it looks like the company has not been able to put in a good performance. However when we dig in to the results, there are lot of positives for the company.

As for the results, in the March 2014 it posted a topline of Rs 2706.32 crore and bottomline of Rs 88.27 crore as against Rs 2393.89 crore and Rs 65.13 crore respectively for December 2013 quarter. When we take a look at the performance of the company for the corresponding quarter last year, the topline seems to have declined a bit. To put the figures in perspective the topline for the March 2013 quarter was Rs 2955.55 crore. The bottomline however was worst as the operating margins declined significantly for the quarter and stood at Rs 29.94 crore.

If we dig in to the details further, company’s business segment can be split into four segments viz., Infrastructure & cities, Energy, Industry and Healthcare. On the topline front there was marginal decline in the all the segments expect the healthcare segment on the Q-o-Q basis.

However the operational performance was better with the operating margins improving significantly. The energy segment witnessed the best recovery as it posted an EBITDA of Rs 51.61 crore for the March 2014 as against the loss of Rs 12.39 crore in March 2013. Even in the healthcare segment the performance for the March 2014 quarter has improved significantly to Rs 26.15 crore from the losses of Rs 32.16 crore in December 2013.

Another noticeable factor is that, Siemens registered new orders worth Rs 2620.10 crore in March 2014 as compared to Rs 2806.50 crore in March 2013.

As on the performance front Sunil Mathur, MD & CEO, Siemens stated that, “The volumes are stable when viewed in the backdrop of the macroeconomic fundamentals. The improved profitability is a clear indication that internal measures aimed at increasing competitiveness have begun to take effect”.

We feel the power as a sector in India would take another few quarters to improve, however the industry and infrastructure sectors are likely to bounce back soon. Hence it is advisable to hold on to the counter for some time.