Factors that will drag down Siemens Q2 PAT

Moneycontrol Bureau

On the back of sluggish business environment, electrical and electronics company, Siemens is likely to report 7.4 percent year-on-year decline in sales to Rs 3517 crore for the March quarter. Net profit is also expected to fall 45.8 percent YoY to Rs 165 crore as big ticket orders were hard to come by.

What will impact revenue growth

Delays in off take by customers

Sluggish industrial capex

Completion of Qatar / Torrent projects which supported revenue during last year

Lower execution in energy segment mainly due to ---

Completion of large projects

Slow moving orders

Impact on margins
 
All of last year, co has suffered from cost escalations impacting margins

While softening commodity prices will provide some cushion, overall margins will be impacted due to execution of low margin T&D and industry orders

Pricing pressure in the power business

Weaker execution

 Currency Impact

Weaker Re all of last quarter could also negatively impact profit margins as the firm imports around 45 percent raw material

Order Inflows remain sluggish

While in the December quarter order inflows surprised positively at Rs 1,994 crore,  new orders still witnessed decline of around 30 percent YoY

 Key issues to watch out

Project execution would be a key monitor as revenue has been showing a moderating trend, impacted by execution constraints  Stabilization in EBITDA margins (have significantly eroded last year)

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