Siemens (Pakistan) Engineering held its corporate briefing session to discuss annual results and provide insight into the outlook for the future. The key takeaways from the call are as follows:
· Company posted a loss of PkR2.0bn (LPS: PkR248.3) during the year, a sharp decline compared to PAT of PkR970.8mn (EPS: PkR117.7) in FY23.
· During the year, the company’s top line rose by 20%YoY to clock in at PkR35.2bn vs PkR29.4bn in FY23. This was primarily driven by the revenue from the smart infrastructure segment, which more than doubled, rising from PkR4.3bn in FY23 to PkR9.0bn in FY24.
· Despite revenue growth during the year, the loss before taxes amounted to PkR1.8bn, led by lower gross margins of 6.3% (vs. 18.3% in SPLY) and unrealized losses on foreign currency-embedded derivatives. The higher finance cost of PkR2.0bn (up 6x YoY) was linked to financing large-scale energy projects.
· New orders totalled PkR26.1bn during the year. Topline growth was driven by energy division sales of PkR25.5bn (up 4%YoY), smart Infrastructure orders of PkR8.9bn (up 107%YoY), and turnover from digital industries of PkR3.1bn (up 72%YoY).
· Siemens operates across three main segments: smart Infrastructure, digital industries, and energy, catering to power generation, smart grids, and industrial automation.
· To note, the company recently divested its energy division to Siemens Gamesa Renewable Energy for a total consideration of PkR17.8bn, with the board approving the scheme in Oct’24.
· During the year, Siemens Pakistan successfully signed a contract with CDigital-HBCC JV to automate 27 barrages and establish a command centre for the Indus Basin Irrigation System to significantly enhance operational efficiency in the region’s water management system.
· Following the 2022 contract with K-Electric to construct the KANUPP-K-Electric Interconnection (KKI) grid, Siemens Pakistan successfully energized the KKI 500/220kV GIS Grid Station Project during the year.
· The scrip is not under our formal coverage. However, we believe that Siemens’ strengths lie in its strong brand reputation, diverse product range, and technology-driven solutions, supported by a robust order backlog. We also acknowledge that the company faces challenges, including vulnerability to currency fluctuations and risks from political instability.
Courtesy – AKD Research
