Siemens Energy Full Year 2024 Earnings: EPS Misses Expectations

As an investor, I've always been drawn to companies that offer a mix of stability, predictability, and consistent growth. Siemens Energy, a global leader in energy technology, has been on my radar for some time, but its recent earnings report has left me with a few questions. Let's dive into the numbers and explore what might have contributed to the EPS miss.

Siemens Energy's full-year 2024 earnings report revealed a mixed bag, with EPS missing expectations. However, a deeper dive into segment performance shows promising trends. Gas Services and Grid Technologies led the charge, with record order intake and substantial revenue growth. Gas Services' orders more than doubled year-over-year, while Grid Technologies' orders reached a record high. Both segments contributed to the overall order backlog, which exceeded the previous high. Siemens Gamesa, despite facing challenges, showed signs of improvement, with orders close to the prior-year quarter's level. The segment's transformation plan aims to reach break-even by 2026.



Now, let's examine the potential reasons behind the EPS miss. One factor that stands out is the performance of Siemens Gamesa, the company's wind energy business. Despite showing signs of improvement, the segment's continued losses weighed heavily on the overall results. The segment reported a negative profit before special items of around €1.3bn, a significant improvement from the prior year's €1.781bn loss, but still a substantial drag on the company's earnings.



Another factor to consider is currency fluctuations and portfolio effects. Siemens Energy's earnings were negatively impacted by currency headwinds, with the euro appreciating against the US dollar, which reduced the value of overseas earnings when translated back into euros. Additionally, portfolio effects, such as the demerger of the energy business from Siemens Limited, India, contributed to the EPS miss. The company's outlook for fiscal year 2025 reflects these challenges, with expectations for a break-even net income excluding assumed positive special items subsequent to the demerger.

As an investor, I'm always looking for opportunities to buy strong, enduring companies at a discount. While Siemens Energy's EPS miss is disappointing, the underlying segment performance and the company's strategic initiatives give me reason to believe that the stock may be undervalued. I'll be keeping a close eye on the company's progress and considering whether to add it to my portfolio.

Action AlertsPLUS, managed by the article's co-writer, holds no positions in any mentioned securities.