Siemens Ag Spons Adr

Please stand by. We're about to begin. Good morning, ladies and gentlemen, and welcome to the Siemens 2025 third quarter conference call. As a reminder, this call has been 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 Atzler, Head of Investor Relations. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome to our Q3 conference call. All Q3 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 Q3 results. After the presentation, we will have time for Q&A. With that, over to you, Roland.

Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our third quarter performance and outlook for the remainder of fiscal 2025. We delivered a robust performance in the third quarter despite ongoing macroeconomic challenges. Geopolitical tensions, high volatility in the tariff environment, as well as sudden changes in trade restrictions seem to have become the new normal. We welcome the progress made and the approach to restore predictability in EU and United States relations through a trade and investment agreement. Since some details of the agreement are still in flux, we will continue to monitor developments very closely. Meanwhile, we are focusing on what we can control by shaping our future as one tech company. We are driving opportunities to strengthen our businesses by fully embracing technological progress driven by data and AI. Through our leadership in industrial AI, we enable our customers to combine the real and the digital worlds to improve competitiveness, resilience and sustainability, and to achieve real impact. And we are engaged in close dialogue with governments across the globe. Our goal is to drive innovation and leverage public and private investment plans in industry infrastructure and transportation to contribute towards high quality and sustainable growth. I'm excited and confident that the recently launched Made for Germany initiative stands for a fresh and dynamic start in our home base. designed to change the country's operating system by focusing on growth, technology and competitiveness. And now let me outline the key highlights of our robust performance. Our strong topline results underscore our customers' confidence in our offerings. Book-to-bill reached 1.28, primarily driven by our mobility business. Our high-quality order backlog continues, To stand at a healthy 117 billion euros, which also reflects the recent euro strengths. This backlog will support further value generating growth. Group orders reached 24.7 billion euros, up substantially by 28% over the prior year. The key driver was mobility. We recorded two major orders in Egypt and the United States, along with a series of further large contract wins. Smart infrastructure kept delivering orders on a high level, with healthy growth in the base business. As expected, orders at digital industries were up sequentially, but below the prior year due to very tough comms in DI software business from exceptionally large license deals. DI's automation orders rose significantly by 19% from a low base driven by China and the United States. The recovery of orders was less dynamic than anticipated due to a high continuing uncertainty about the future tariff environment and ongoing trade disputes. This climate of volatility is weighing on business confidence in several of our core industries, such as automotive and machine building, where sales cycles are extended and investment decisions are taking longer. Overall revenue growth reached 5% with strong contributions from mobility, smart infrastructure, and Siemens Healthineers. A standout was again smart infrastructure's electrification business, which grew 16% on stringent backlog execution driven by the data center vertical. The automation business of digital industries returns to a year-over-year revenue growth for the first time since the end of fiscal year 2023. As expected, revenue in software was lower at DI, mirroring very tough comps from large license deals last year. From a regional perspective, group revenue was driven by EMEA up 10% and by the Americas up 9%, again fueled by strong momentum in the United States. Asia-Australia was down 10% on tough comps in China, particularly offset by strength in India up 16%. Robust revenue growth converted into solid results for profitability and to excellent free cash flow. Industrial business profit of 2.8 billion euros, equaling 14.9%, was in line with market expectations, with smart infrastructures, mobility, and health in years, delivering margin expansion. Earnings per share pre-PA reached 2 euros and 93 cents, excluding alter and dogmatics effects, totaling a negative of 15 euro cents. Strong cash conversion led to an impressive 3 billion euros of free cash flow in the industrial business. Although macroeconomic and geopolitical uncertainties persist, we confirm our outlook for fiscal 2025, and Ralph will give further details. Our teams are working diligently towards our long-term direction for Siemens as one tech company to achieve stronger customer focus, fast innovations, and higher profitable growth. We made major progress in stringently executing the program's investment track to shape our portfolio. Key examples were closing the Dogmatics acquisition to expand our AI-powered software offerings for life sciences at the beginning of Q4, which was much earlier than expected. And we are strengthening our portfolio of intelligent hardware by integrating the industrial drive technology business acquired from ABM Pabst. This move enables us to tap into growth markets like free-moving, battery-powered, driverless transport systems. With the successful listing of the energy business in India, we paved the way for streamlining our company structure as promised, and this will empower our business to succeed independently and grow faster. And in Munich, we opened the expansion of one of Europe's most modern train factories and service centers. This site is a testament to how competitive and successful manufacturing in Germany can be. Highly skilled employees are using cutting-edge technologies, maximum automation and digitalization to deliver superior products and digital services. As part of the program's productivity initiative, We are continuously working on optimizing our footprint. To mitigate risk from tariffs and strength resilience, we are expanding our supplier network and continuing to localize value chains. We are making good progress in strengthening competitiveness in DI's automation business. We signed a holistic transformation agreement in Germany with the labor representatives. The aim is to adjust capacities, foster the qualification of employees and strengthen our customer centric sales approach. You can see some examples for long term partnerships where we bring Siemens accelerator and domain know how to gather for lasting customer success. For decades, Siemens has been supporting Northrop Grumman in creating an industry leading digital energy engineering ecosystem to deliver cutting edge aerospace and defense systems. This year, Siemens received their supplier excellence award, and we prolonged our partnership agreement for another three years. Northrop Grumman will expand to use the use of our Siemens accelerated portfolio for real-time collaboration, rapid development, and a digital-first approach. For many years now, Siemens has been partnering with the German federal government to modernize historic cultural buildings, among them the landmark Berlin State Library. By implementing the latest hardware and digital technologies such as Building X, they are transformed into smarter and more energy efficient assets. Investments are fully covered by guaranteed savings of energy costs. Siemens is also a trusted partner for startups like German clean energy company Turn2X. Our global agreement covers technologies such as automation, energy management, digital twins and cybersecurity for remote plant operations to rapidly scale up climate neutral methane gas production capacity. Finally, a great example from our mobility business. After intense hard work, we achieved major milestones and were able to book the turnkey order of around 3.5 billion euros to build the blue and red lines in Egypt as a core part of a modern rail system. This project has a huge sustainability impact and will cut carbon emissions by 70% compared to car or bus transport. Talking about sustainability impact. In June, we committed ourselves to new sustainability ambitions in the areas of decarbonization and energy efficiency, resource efficiency and circularity, as well as people, centricity, and society. And all are based on a solid foundation of ethics and governance. Our industry-leading impact target is to achieve 1,000 megatons of custom avoided emissions by 2030. Besides the EG projects, a major contribution will come from, for example, our 1,200 electric freight locomotives made in India, where we have now entered full production mode. A great example for resource efficiency is our technology partnership with Cadolto and Legrand, for the growing market of prefabricated modular edge data centers. We take resource efficiency seriously with our robust EcoDesign target of 100% for products, services, and software by 2030. This is also reflected in our Siemens EcoTech label, which we introduced last year. And until today, more than 50,000 Siemens products have earned this independent certification which is an impressive ramp up. Now let's take a brief look at the main KPIs of our SaaS transition. Nominal ARR numbers now include Altair, whose software revenue is almost entirely recurring. This lifted the ARR to 4.9 billion euros. On a comparable basis, ARR growth again reached a very healthy level of 12% over the previous year, The cloud portion stands at 2.1 billion euros, which is equal to 47% of ARR, excluding the Altair effects. We are confident to achieve the target of 50% cloud ARR by the end of fiscal year 2025, and all customer-centric performance indicators continue to show a favorable trajectory. With these perspectives, I will leave you, Ralf, for further details on our business and outlook.