Siemens Q2 net rises 48 per cent; margins under pressure

The second quarter results of engineering major Siemens India are more or less in line with expectations, though the performance was not as good as that of ABB. Siemens'' margins came under pressure during the quarter on account of higher input costs … which is a worrying factor.

Net profits for the quarter increased 48.45 per cent to Rs117.83 crore from Rs79.37 crore for the previous year quarter. Total revenues increased 57.84 per cent to Rs1,175.32 crore from Rs744.61 crore.

The company benefited from a 63.96-per cent rise in other income, excluding other operating income, to Rs41.88 crore from Rs25.54 crore. Other operating income, which includes fee income, for the quarter was Rs18.45 crore – a 3.4 times increase over Rs4.19 crore reported for previous year quarter.

Operating profits, excluding other income, increased 34.76 per cent to Rs121.36 crore from Rs90.06 crore. Operating margins came down 182 basis points to 10.71 per cent of net operating income from 12.53 per cent for the prior year quarter.

The main factor behind the decline in margins was a sharp 72.32 per cent jump in input costs. Staff costs rose 38.68 per cent while the company managed to control other expenses, which increased a modest 14.02 per cent.

During the quarter, new orders worth Rs1,591.1 crore were received by the company — an increase of 72 per cent from Rs924.6 crore received during the same quarter of previous year. The company''s order book at the end of the quarter stood at Rs7,621.7 crore which is substantially higher than the order book position of Rs2,676.6 crore at the end of the previous year quarter.

The company merged two wholly owned subsidiaries, Demag Delaval Industrial Turbomachinery and Siemens VDO Automotive, with the company. The former manufactures equipment for the power sector while the latter is in the automotive products business.