Siemens Energy Earnings: Profitability Restored, Boosted by One-Off Disposals

No-moat Siemens Energy returned to profitability during first-quarter fiscal 2024, largely driven by smaller losses at its Siemens Gamesa division and the EUR 1.7 billion disposal of an 18% stake in its Indian business, which will help restore some confidence in its balance sheet. Operating profit excluding special items of EUR 208 million (translating into a 2.7% margin) during the first quarter comfortably beat consensus' EUR 106 million loss and is a significant improvement on its EUR 282 million loss in the prior year. Full-year guidance of an operating margin between 1% and negative 2% remains unchanged, which likely indicates that the challenges Siemens Energy has faced during the past year, most notably relating to Siemens Gamesa, are not entirely over. Shares are up 20% year to date, following the unexpected positive preliminary update provided on Jan. 24, and are trading in line with our EUR 14.80 fair value estimate, which we maintain.