Siemens gains from backlogged orders

Siemens Pakistan Engineering Company Limited (PSX: SIEM) recently announced its financial performance for its first half of FY22 ending on March 31, 2022 with a whopping jump in profits. The company operated in gas & power (G&P), smart infrastructure (SI), and digital industries (DI) divisions. The company’s fiscal year ends on 30 September.

In 1HFY22, the company’s sales increased by 50 percent year-on-year. Siemens Pakistan Engineering Company Limited’s earnings were however seen growing staggeringly from a loss of Rs198 million in 1HFY21 to a profit of Rs678 million in 1HFY22. The company’s gross margins were seen going through the roof in 2QFY22 and 1HFY22.

This rise continued to reflect in operating profits and net profits despite no significant and equivalent increase in key expenses; decline in other income; no gain on the disposal as in the previous period; and allowance of credit loss in the period versus reversal in the previous. The company highlights that it continued to benefit form a buildup of order won in the previous year, particularly in the transmission business and the shirt cycle distribution business. While the growth in new orders also stood at 20 percent year-on-year in first six months of FY22 with energy orders constituting 65 percent of the total orders booked.

In the last fiscal year (FY21), SIEM posted recovery in the post COVID times led by energy business. Total new orders too doubled versus corresponding year. However, despite the revival and recovery cycle and continued rise in the orders in the last two years, the ongoing political and economic volatility and uncertainties overshadows the sustained growth prospects.