Siemens Energy shares rise as gas and power division orders fuel Q4 profit beat

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By Scott Kanowsky 

Investing.com -- Shares in Siemens Energy AG (ETR:ENR1n) jumped by more than 6% on Wednesday after the German group unveiled better-than-expected fourth quarter profit, thanks to strong order growth that helped offset weakness at its wind turbine business.

Net income for the three-month period ended on September 30 swung to a profit of €378 million (€1 = $1.0415) after a loss of €383M in the corresponding timeframe last year. Analysts had predicted the bottom-line figure would rise to €288M.

Total group-wide quarterly revenue increased by 5.9% to €9.18B, beating estimates of €8.57B.

The Munich-based firm said its gas and power division was boosted, in particular, by large orders for grid connections for offshore wind farms in Germany and a high-voltage direct current transmission system between Germany and the U.K. Order backlog came in at €62.5B, a new record high.

However, the unit booked a €19M expense stemming from a plan to wind down its Russian business in the first quarter of its 2023 fiscal year. Higher material prices and negative net currency effects also weighed on performance.

The gas and power returns partly made up for disappointing full-year results at Siemens Gamesa, which was hit by supply chain issues, elevated input expenses, and competition. Last week, the wind turbine maker - in which Siemens Energy is the main shareholder - reported a dip in annual core earnings margin to -5.9%, below its forecast of -5.5%.

Earlier this month, Siemens Energy launched a €4.05B bid to acquire the shares in Siemens Gamesa it does not already own. In a statement, president and chief executive officer Christian Bruch said the integration of Siemens Gamesa will help improve the unit's profitability.

Meanwhile, Siemens Energy warned that it will be negatively impacted by subdued global growth and further supply chain disruptions in the year ahead. But it still expects to post year-on-year growth in profit margin before special items of 2-4% on revenue expansion of 3-7%.

Analysts at Deutsche Bank said in a note to clients that Siemens Energy's balance sheet is in "very good shape," while its guidance is "bang in line" with consensus estimates.