Siemens Ag Spons Adr

Good morning, ladies and gentlemen, and welcome to Siemens 2024 Second Quarter Conference Call. As a reminder, the call is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on page two of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Tobias Hadler, Siemens Investor Relations. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome to our Q2 conference call. All Q2 documents were released this morning and can be found also on our IR website. I'm here today with our CEO, Roland Busch, and our CFO, Ralph Thomas, who will review the Q2 results. After the presentation, we will have time for Q&A. With that, I hand it over to you, Roland.

Thank you, Tobias, and good morning, everyone. Thank you for joining us. We delivered a solid second quarter performance. This proves our resilience in a still-muted macroeconomic environment. And let's begin with the key takeaways. The robust top line momentum of our business highlights the strong demand from our customers to drive their digital and sustainability transformations. Book2Build reached a strong level of 1.07 with all businesses above one, except for digital industries. Order backlog climbed to another all-time high of 114 billion euros, supporting future profitable growth. Orders at 20.5 billion euros were 12% lower organically, materially influenced by the very tough comparable at mobility due to prior years major locomotive order in India. Smart infrastructure delivered record orders up double digit and for the first time exceeding the 6 billion euros mark. Digital industries was sequentially up, driven by very strong software business. However, orders in the automation businesses came in slightly lower compared to the first quarter due to still muted industrial demand. Stock levels at customers and channel partners remained elevated, particularly in China. We expect gradual improvements in the quarters ahead, but slower than previously anticipated. The key reason is unmuted development in China, also due to overcapacities in certain custom industries, such as solar or e-vehicles. In addition, investment sentiment in core European exporter of markets like Germany is recovering only slightly from a wait and see mode. Stringent backlog execution led to a stable comparable revenue development of 19.2 billion euros overall. Clear growth contributions came from mobility and smart infrastructure, both up by 6%, while Siemens Healthineers grew by 3%. As previously indicated, digital industries recorded a revenue decrease of 11%. Automation saw effects of significantly lower book and bill order levels from short cycle business products. Moreover, prior years Q2 marks an all-time high comparable. This was only partially offset by high teens growth in the software business fueled by demand from semiconductor customers i am again proud for the electrification business in smart infrastructure showing great competitive strengths with an excellent growth of 14 strong momentum in the data center and power distribution markets continues solid execution led to industrial business profit of 2.5 billion euros close to the prior year level Increases in smart infrastructure and health in years nearly offset current softness in high margin digital industries automation. This translated into a profit margin of 14%. After a strong start in the first quarter, we again achieved consistent free cash flow performance of 2.1 billion euros in our industrial business. As a result, at half year, our accumulated free cash flow is ahead of prior year's level. After delivering a solid first half of fiscal 2024, we continue to focus on leveraging our order backlog, our record order backlog through to stringent execution. Therefore, we confirm our group outlook for fiscal 2024 on all matrices. However, We lower our expectations for digital industries at the midpoint for revenue growth by 7.5 percentage points and for profitability by 20 basis points. On a positive side, after a strong first half year, we narrow the outlook for smart infrastructure and lift the lower end by 100 base points for each revenue growth and profitability. In addition to delivering on operational performance, we continued to make good progress in driving our long-term strategic priorities. The key area is portfolio optimization with several important steps. Most important, Innomotix has been set up as a strong independent company and will shape its future together with KPS as its new owner. Some more facts in a minute. In addition, we announced a bolt-on acquisition in the industrial drive technology business of EBM Papst. This will strengthen our motion control business to tap growth opportunities in the field of battery-powered drive solutions. We will drive organic growth in cutting-edge sustainable and digital technologies powered by industrial AI. My discussions with customers at the Hannover Fair and elsewhere confirmed our leading technology position and the demand for deep domain know-how. A key success factor is our expanding ecosystem. We are partner of choice for our customers to scale sustainability impact, digital transformation and ultimately competitiveness across all end markets. This is underpinned by the launch of a range of new leading edge products in our Siemens Ecotech label. I will expand on this shortly. Furthermore, 13% revenue growth in digital business during the first half year is clear evidence for a long-term growth engine. I already talked about our key financials in brief. Macroeconomic dynamics were also reflected in our regional revenue distribution of growth. The Americas stood out with 8% revenue growth, with trends in the United States, while EMEA was down 2% on weakness in Germany. Asia-Australia decreased by 5%, held back by softness in China. EPS pre-PPA came in at a healthy €2.73. As I already mentioned, we are very active to further optimize our portfolio and sharpen our technology company profile. A decisive milestone in finding the best owners for our portfolio companies is the announced divestment of Enermotics to KPS for an enterprise value of €3.5 billion. Due to the very attractive offer made by KPS, Siemens has decided not to further pursue preparations for a public listing. KPS has an excellent track record in the acquisition of manufacturing and industrial enterprises. KPS will continue a deep cross-company know-how of manufacturing processes and will support Enermonics and maintain its industry leadership globally. This will offer Enermotics and its 15,000 employees excellent opportunities to best serve their markets and realize the full growth potential. A book gain of around 2 billion euros post-tax expected at closing demonstrates once more how Siemens can successfully improve businesses and increase their value. The closing of this transaction is expected for the first half of fiscal 2025. The unbundling of business activities of Siemens and Siemens Energy in India is making good progress. With board approval of Siemens Limited in India for a demerger, the formal separation process is fully on track to achieve a listing of Siemens Energy Limited India Limited within 2025. And stay tuned, we continue to work on further portfolio optimization activities. Now, let's switch gears to latest innovation progress. With a recent launch of the Siemens Ecotech label, we are pursuing the boundaries and pushing the boundaries for industry-leading sustainability transparency. Each product comes with standardized product data sheet across key environmental criteria. This makes the data relevant for customers' decisions based on objective sustainability criteria covering the entire lifecycle performance. Many Siemens products are already built on our robust EcoDesign approach. A lighthouse example is the recent launch of one of the world's most innovative circuit protection devices with cutting-edge electronic switching technology. It is up to a thousand times faster and more precise for new levels of protection. And it combines multiple product functions in one device. saving up to 90% of the components of conventional devices otherwise required. Our customers show great interest. This isn't just a product evolution, but a game changer in this space. We are the first ones to launch this unique combination of next level low voltage production. Those of you who visited our vibrant booth in Hannover saw firsthand our deep industry expertise and intense customer and partner engagement of the dedicated Siemens team. Together with NVIDIA and chip builder HD Hyundai, we showcased a revolution how products and experiences will be designed, manufactured, and sold. Siemens PLM software Teamcenter X will be powered by NVIDIA Omniverse technologies and generative AI functionality for photorealistic, real-time, and physics-based visualization. Data simulators. HD Hyundai engineers can visualize and interact with an immersive digital twin of hydrogen power chips with up to 7 million parts. This will reduce workflow waste, errors, and save time and cost. The industrial metaverse with real impact. Building on our successful work with Microsoft and pilot customer Schaeffler, we are bringing generative AI capabilities to the shop floor at scale. Siemens Industrial Copilot is now seamlessly connected to our tier portal and enables to accelerate generation of complex automation code in engineering and reduce development times. When this is just the beginning, we are working on Copilot solutions across multiple industries and across entire value chains. Our smart infrastructure team launched ElectrificationX, a comprehensive application suite to manage entire energy networks in multiple industries. This rounds off our offering, combining alongside BuildingX, GridScaleX, ReligentX, and InterCirculationX. Unprecedented growth in AI application drives a massive build-out of data centers globally with soaring demand for power. This market momentum creates an abundance of opportunities for us with existing customers such as hyperscalers and increasingly with global colocation operators. Our comprehensive offering combines the real and the digital world to build sustainable data centers. We cover the full range of low and medium voltage electrification infrastructure, fire safety, as well as building management. This is combined with digital operations and applications from our Siemens accelerator portfolios, such as digital twins and AI-based cooling optimization. Our ongoing capacity expansion for electrification equipment will further strengthen our market position through 2025. In the first half year, we continued our growth path and achieved around 25% revenue growth and a stellar order intake pointing to further market share gains. We expect other growth in the 20s for full fiscal year 2024. Here, you can see some compelling examples how industry-specific know-how in combination with our cutting edge portfolio are crucial to achieving sustainability impact. And let me highlight three examples. As part of our strategic partnership with Mercedes-Benz, we have co-created a digital energy twin to improve the integration of energy efficiency and sustainability measures in factory designs and upgrades. It has been developed and tested in Factory 56 in Sindelfingen and will be rolled out to significantly reduce energy and early phase planning time. I am excited that we agreed with Foxconn to collaborate on driving digital transformation and sustainability across the booming electronics manufacturing industry. The goal is to establish a scalable and seamless engineering and manufacturing ecosystem with a higher degree of automation, the factory of the future. In addition, our long-standing partnership with Brightline is set for an exciting next chapter. Reitle Invest has named Siemens Mobility as the preferred bidder to build 10 high-speed train sets for America's first high-speed rail line. This next generation of trains is designed featuring the latest digital technologies such as RelationX and 30% more energy efficient than other high-speed trains. Our digital business remains on a strong growth trajectory and stands at 3.8 billion euros after the first half of fiscal 2024, up by 13%. Across all our businesses, cloud-based portfolio expansions for Siemens Accelerator will further support growth. A key contributor to digital business is the ongoing progress of transformation, main parts of our DI software business towards software as a service. ARR growth kept its pace on a very healthy level of 15% over a prior year. The cloud portion already stands at 1.5 billion euros, equalling 37% of total ARR. The 40% target is well within reach. All indicators point to a strong momentum, including more than 14,700 customers having signed up on the SaaS business model. A vast share comes from small and medium enterprises. And with that, over to you, Ralf, to give further details regarding our operational performance.