FGD and DeNOx
NEWSLETTER

July- August 2022

No. 530

 

Table of Contents

COAL – WORLD

BIOMASS

BUSINESS

 

 

 

COAL – WORLD

 

Germany’s First Restarted Coal Power Plant is About to be Connected to the Country’s Grid

On August 1 the German energy regulator, the Federal Network Agency, announced that the Meerrum coal power plant in the Hohenhammer region of Lower Saxony is about to be reconnected to the German grid.

 

Affected by the energy crisis, the German federal government issued a decree on July 14 to allow some closed coal and oil power plants to be put back into use until April 2023 to save natural gas. The Meerrum power plant, which has been on standby since early December 2021, will be the first coal power plant to be reconnected to the German grid after the decree. With a net output of 690 megawatts, the plant could theoretically power more than 500,000 homes.
Babcock & Wilcox Growth Continues in Middle East & Africa with $18 Million Environmental Upgrade Contract for Power Plant

 

Babcock & Wilcox (B&W) announced its B&W Environmental business segment has been awarded a contract for approximately $18 million to provide advanced environmental equipment to reduce emissions for a power plant in Africa.

 

B&W Environmental will design, engineer, and provide manufacturing support to upgrade 24 electrostatic precipitators (ESPs), which will be used to significantly reduce particulate emissions. B&W Environmental will also provide technical support during construction and commissioning.

 

B&W Environmental has extensive experience with both dry and wet ESP technologies, and has installations in a wide range of applications, including power generation, waste-to-energy, cement production, chemical manufacturing, oil & gas, pulp & paper, steel manufacturing and more.

 

China Building Lots of Clean Coal Plants

 

China’s rapid buildout of new power plants, needed to satisfy the country’s increasing demand for electricity, includes several gigawatts of coal-fired generation. The first 1-GW unit of an eventual 4-GW installation in Inner Mongolia provides a model for more coal-fired plants across the country. China began construction of at least 33-GW of coal-fired generation last year, more than three times the amount of the rest of the world combined. Another 7.3 GW was approved for construction in the first six weeks of 2022.

Shanghaimiago is an example of the high thermal efficiency and minimal pollution.

Shanghaimiao Part of China’s Push for More Efficient Coal Plant Designs (powermag.com )

Second Thar Coal Power Plant Launched Under CPEC

 

The second Thar coal-based power generation plant having a capacity to produce 330 megawatts of electricity for the country has been launched in Tharparkar under the China-Pakistan Economic Corridor.

 

Construction of the project having a cost of $520 million started in May 2018 and closed in January 2020. The completion of the project was delayed due to restrictions caused by the coronavirus pandemic and delay in the release of financing by foreign lenders.

 

Sindh Chief Minister, Syed Murad Ali Shah, inaugurated the project to synchronize its power production with the national grid.

 

The project is likely to start its full commercial operations by the end of the current month. With the launch of the new power plant, 990 MWs of Thar coal-based electricity is being produced to overcome the power shortfall in the country.

The CM said the coal extraction and power production in the Thar area had also transformed the lives of local destitute people who were being given employment, education, health care, and skill learning facilities.

 

He said his government had been working with the federal authorities for establishing a rail link for speedy transportation of Thar coal to the rest of the country for energy production.

BIOMASS

ANDRITZ Receives the 15th Order to Deliver a High-Efficiency PowerFluid Circulating Fluidized Bed Boiler to Japan

ANDRITZ has received another order from Toyo Engineering Corporation in Japan to supply a 50-MW PowerFluid circulating fluidized bed (CFB) boiler on EPS basis. The boiler will be part of the biomass power plant in Gobo, Wakayama Prefecture, in Japan. Start-up is planned for 2025.

ANDRITZ will supply a biomass boiler and flue gas cleaning system to Wakayama Gobo Biomass Power Plant G.K. in Japan.

The ANDRITZ PowerFluid (CFB) will be designed with a reheat system and high steam parameters and integrated into a biomass-fired power generation facility to be fueled by wood pellets and palm kernel shells. With its state-of-the-art technology, it is the perfect solution to meet CO2 reduction targets and contribute towards carbon neutrality in Japan. The biomass power plant will be capable of supplying power for roughly 110,000 Japanese households.

Lots of Developments Reported by Biomass Magazine

Among the recent developments was coverage of the Drax pellet production. In its financial report, Drax also discussed its planned bioenergy carbon capture and storage (BECSS) project at Drax Power Station. The company submitted a planning application for the BECCS project in June and is conducting a front-end engineering and design study. The company also noted it is working to develop models and locational preferences for international BECCS developments, with a primary focus on North America. https://biomassmagazine.com/articles/19192/drax-pellet-production-up-54-during-first-half-of-2022

The company is also expanding operations in Asia and is particularly active in Japan.
 https://biomassmagazine.com/articles/19146/drax-expands-its-operations-into-asia

The company plans to invest £2 billion in the 2020s in its plans to develop two bioenergy with carbon capture and storage (BECCS) units.
 https://biomassmagazine.com/articles/19140/drax-submits-plans-to-build-worldundefineds-largest-ccs-project

The European Union consumed a record 23.1 million metric tons of wood pellets in 2021.
 https://biomassmagazine.com/articles/19198/eu-wood-pellet-demand-to-set-a-new-record-in-2022

High supply chain and energy costs, lingering pandemic effects and Russia’s attack on the Ukraine continues to have profound impacts across the globe. In the context of the wood pellet industry, it has led to a projected shortfall of pellet fuel in the United Kingdom and other European countries. 
 https://biomassmagazine.com/articles/19170/navigating-the-turbulence-of-global-trade

The first phase of Marathon Petroleum’s renewable diesel conversion project at its Martinez refinery in California is expected to be mechanically complete by the end of the year.
 https://biomassmagazine.com/articles/19208/marathon-provides-update-of-martinez-conversion-project

BUSINESS

Babcock & Wilcox Enterprises Reports Revenues, Adjusted EBITDA, Bookings and Backlog have Improved Compared to the Second Quarter of 2021

Q2 2022 Highlights:

– Revenues of $221.0 million, a 9% improvement compared to the second quarter of 2021
– B&W Renewable segment revenues of $75.2 million, a 96% increase compared to the second quarter of 2021
– Bookings of $245 million, a 46% improvement compared to second quarter bookings in 2021
– Ending backlog of $731 million, a 46% increase compared to backlog at the end of the second quarter of 2021
– Net loss of $6.3 million, compared to net income of $1.4 million in the second quarter of 2021
– Loss per share of $0.07, compared to earnings per share of $0.02 in the second quarter of 2021
– Consolidated adjusted EBITDA of $20.6 million, a 35% increase compared to the second quarter of 2021
– Establishes Senior P&L Leadership over Thermal and Renewable/Environmental Segments

"Our results for the second quarter demonstrate our continued progress against our plan and long-term growth strategy. These accomplishments, combined with our recent and anticipated bookings, position us for a milestone 2022, 2023 and beyond,” said Kenneth Young, B&W’s Chairman and Chief Executive Officer. “We’re expanding our presence globally, both organically and through recent strategic acquisitions, and remain intently focused on continuing to convert our global pipeline of identified project opportunities to bookings as reflected in the 46% improvement over the same quarter a year ago. The war in Ukraine and resurgence of COVID-19, along with the dynamic macroeconomic environment, present ongoing challenges to our supply chain and overall project timing, and while we continue efforts to effectively mitigate these challenges, we remain cognizant of the uncertainties they create.”

“We continue to make tremendous strides within our clean and renewable energy businesses, and as we advance the green initiatives within our environmental and renewable segments through technology development and strategic acquisitions, we believe we are uniquely positioned to lead the global clean energy transition. Our previously disclosed partnership with Fidelis and Kiewit to provide our ClimateBright™ decarbonization platform along with B&W’s 200-megawatt electric net-negative-carbon biomass power plant at the Port of Greater Baton Rouge, Louisiana, provides an outstanding example of the strides forward we are making in this space. Fidelis recently announced the start of construction for the Grön Fuels complex at this port, which using B&W’s biomass and BrightLoop™ technologies, would create the world’s largest net-negative CO2 biomass-to-energy facility.”

“Consistent with our strategic growth plan, we continue to evaluate additional acquisition opportunities for both emerging technologies and mature markets that provide attractive economics and significant synergistic potential,” Young stated. “As we look forward to the second half of 2022, based on our first-half performance and combined with strong recent bookings and backlog, we are reiterating our 2022 target of $110 million to $120 million in adjusted EBITDA1. However, we acknowledge the uncertainty that remains with current macroeconomic and geopolitical headwinds such as the war in Ukraine, global supply chain constraints and potential project delays. Although we have largely mitigated these factors to date, these headwinds continue and have the potential to impact the timing of our revenue recognition on projects as we progress through the second half of 2022. Longer term, our robust pipeline of more than $7.5 billion of identified global project opportunities in the next three years positions us well for multi-year growth and we are preparing to capitalize on the positive impacts across our customer base as demand for long-term energy security and decarbonization technology grows.”

“To further drive our growth efforts, we have established senior leadership over our Global Thermal Segment and our Global Renewable & Environmental Segments, with direct reporting to Jimmy Morgan, Executive Vice President and Chief Operating Officer,” Young said. “Christopher Riker has been named Senior Vice President, Thermal, to lead our Thermal Business, while Joseph Buckler has been named Senior Vice President, Clean Energy, to lead our Renewable & Environmental Segments. The continued growth of our business makes it timely to put these changes in place to provide specific focus over these segments from a market-facing and P&L perspective, and to further unlock shareholder value in maximizing their long-term strategic growth plans.”

Additionally, Brandy Johnson has been named Chief Strategy and Technology Officer. She will report to Kenneth Young and will lead the research and development, demonstration, and commercial implementation efforts for our mature and emerging technologies.

 

“We are excited to move Chris, Joe and Brandy into these new roles, which will further enhance our ability to react strongly and quickly to market changes and provide additional focus to not only drive development and implementation of our new technologies, but also as we continue to augment our mature Thermal technologies to support the growing needs of our customers,” said Mr. Young.

Q2 2022 Financial Summary

Consolidated revenues in the second quarter of 2022 were $221.0 million, a 9% improvement compared to the second quarter of 2021, primarily due to higher volume driven by new-build projects and the impact of acquisitions completed in the first quarter of 2022, in addition to a higher level of volume in the Renewable segment and partially offset by a lower level of construction activity in the Thermal segment. The negative impacts on the global economy as a result of the ongoing impact of COVID-19 and the Russia-Ukraine military conflict adversely impacted each of the Company's segments causing shortages of supplies and materials and affecting the timing of revenue on several projects. Net loss in the second quarter of 2022 was $6.3 million, a decrease of $7.7 million compared to net income of $1.4 million in the second quarter of 2021, primarily due to the effects of unfavorable foreign exchange rates and a legal settlement. Loss per share in the second quarter of 2022 was $0.07 compared to earnings per share of $0.02 in the second quarter of 2021. GAAP operating income in the second quarter of 2022 was $3.7 million compared to operating income of $2.8 million in the second quarter of 2021. Adjusted EBITDA was $20.6 million compared to $15.2 million in the second quarter of 2021. Bookings in the second quarter of 2022 were $245 million, a 46% increase compared to second quarter bookings in 2021. Ending backlog was $731 million, a 46% increase compared to backlog at the end of the second quarter of 2021. All amounts referred to in this release are on a continuing operations basis, unless otherwise noted. Reconciliations of net income, the most directly comparable GAAP measure, to adjusted EBITDA for the Company's segments, are provided in the exhibits to this release.

Babcock & Wilcox Renewable segment revenues were $75.2 million for the second quarter of 2022, an increase of 96% compared to $38.3 million in the second quarter of 2021. The increase in revenue was primarily driven by higher volume of new-build projects as well as the acquisitions of Fosler Construction and VODA. Adjusted EBITDA in the quarter was $8.9 million compared to $3.4 million in the second quarter of 2021, primarily due to the higher revenue volume of new-build projects, as discussed above in addition to a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold, partially offset by higher levels of shared overhead and SG&A allocated to the segment.

 

Babcock & Wilcox Environmental segment revenues were $31.6 million in the second quarter of 2022, an increase of 11% compared to $28.4 million in the second quarter of 2021. The increase was primarily driven by an emissions control technologies contract for an industrial facility. Adjusted EBITDA was $0.6 million, compared to $2.7 million in the same period last year, primarily due to the lower volume of parts sales.

 

Babcock & Wilcox Thermal segment revenues were $116.3 million in the second quarter of 2022, a decrease of 15% compared to $136.3 million in the second quarter of 2021, primarily due to completion of a construction project during Q2 2021, offset partially by new acquisitions. Adjusted EBITDA in the second quarter of 2022 was $16.4 million, an increase of 30% compared to $12.6 million in the second quarter of 2021, primarily due to the mix of products.

Liquidity and Balance Sheet

On June 30, 2022, the Company had total debt of $334.3 million and a cash, cash equivalents and restricted cash balance of $80.2 million.

Impacts of COVID-19 and the Russia-Ukraine Military Conflict

The ongoing COVID-19 pandemic and Russia-Ukraine military conflict has disrupted business operations, including trade, commerce, financial and credit markets, and daily life throughout the world. Our business has been, and continues to be, adversely impacted by the measures taken and restrictions imposed in the countries in which we operate and by local governments and others to control the spread of this virus as well as the negative impact of the Russia-Ukraine military conflict.

The COVID-19 pandemic has also disrupted global supply chains including the manufacturing, supply, distribution, transportation, and delivery of the Company's products. The Company has observed significant disruptions of the operations of logistics, service providers, delays in shipments and negative impacts to pricing of certain products. Disruptions and delays in the Company's supply chains as a result of the COVID-19 pandemic could continue to adversely impact the ability to meet customers’ demands. Additionally, the prioritization of shipments of certain products as a result of the pandemic could cause delays in the shipment or delivery of the Company's products. Such disruptions could result in reduced sales.

The impact of the COVID-19 pandemic and the Russia-Ukraine military conflict have caused many of the projects the Company had anticipated would begin during the prior two years to be delayed into 2022 and beyond. For example, customers and projects require B&W's employees to travel to customer and project worksites. Certain customers and significant projects are located in areas where travel restrictions have been imposed, certain customers have closed or reduced on-site activities, and timelines for completion of certain projects have, as noted above, been extended into 2022 and beyond. Additionally, out of concern for the Company's employees, even where restrictions permit employees to return to its offices and worksites, the Company has incurred additional costs to protect its employees as well as advised those who are uncomfortable returning to worksites due to the pandemic that they are not required to do so for an indefinite period of time. The resulting uncertainty concerning, among other things, the spread and economic impact of the virus has also caused significant volatility and, at times, illiquidity in global equity and credit markets.

The Russia-Ukraine military conflict has also disrupted the supply of materials that the Company and its customers source from the Ukraine, such as steel. In certain cases, customers have had to delay projects due to supply chain disruption. Such delays have negatively impacted the anticipated start date of projects. Additionally, supply chain disruptions caused by COVID-19 and the Russia-Ukraine military conflict have prompted the Company to seek alternative suppliers and could potentially result in indefinite delays in receiving materials. The full extent of the impact of these ongoing events on the Company’s operational and financial performance is uncertain, out of the Company’s control, and cannot be predicted.

CECO Environmental Reports Record Backlog, Strong Revenue And Net Income Growth, and Update To Full Year Outlook

 

CECO Environmental Corp. reported its financial results for the second quarter of 2022.

Highlights for the Quarter and Recent Corporate Developments*

*All comparisons are versus the comparable prior year period, unless otherwise stated.
Reconciliations of GAAP (reported) to non-GAAP measures are in the attached financial tables.

"We delivered strong results in the second quarter and are pleased to share that we increased our backlog to new record levels while driving sales growth of more than 30 percent and EBITDA growth of more than 60 percent.  We also repurchased more than $4 million of shares in the quarter as we systematically execute our capital allocation strategy that includes both M&A and share repurchases," said CECO Chief Executive Officer, Todd Gleason.

Second quarter operating income was $5.7 million, up 171 percent when compared to $2.1 million in the second quarter 2021. On an adjusted basis, non-GAAP operating income was $8.7 million, up 85 percent when compared to $4.7 million in the second quarter of 2021. Net income was $4.4 million in the quarter, up $4.1 million compared to $0.3 million in the second quarter 2021. Non-GAAP net income was $6.4 million, up $3.3 million compared to $3.1 million in the second quarter 2021. Adjusted EBITDA was $10.6 million, up 63 percent compared to $6.5 million in the second quarter 2021. The Company repurchased $4.3 million shares in the second quarter as part of the previously announced $20 million share repurchase program.


In the second quarter, the Company completed the acquisition of Compass Water Solutions, based in California, USA and Western Air Duct, a company based in the United Kingdom. Combined, the companies generated 2021 full year sales of approximately $15 million and each delivered double-digit EBITDA margins.

"We are extremely pleased with our year-to-date results which have included orders growth of approximately 55 percent, record backlog up more than 35 percent and revenue growth up more than 30 percent through the first half. We have closed multiple strategic acquisitions that add new capabilities and market opportunities to our industrial air and industrial water platforms, and those acquisitions are already performing very well against their operating targets," added Gleason.

The Company updated full year 2022 guidance to $375 to $400 million in revenue, up approximately 19 percent at the midpoint year over year. The Company updated its full year adjusted EBITDA to reflect a range starting at $37 million and the high-end exceeding $40 million, up more than 50 percent at the midpoint year over year.

"Our revised outlook reflects our continued confidence that we expect to deliver outstanding results through the year. We remain in excellent position to drive strong double-digit sales and income growth while also maintaining our focus on capital allocation," concluded Gleason.

Fuel Tech Reports Revenues Increased 22% During the Second Quarter of 2022

Fuel Tech, Inc. reported financial results for the second quarter and six months ended June 30, 2022.

“Revenues increased 22% during the second quarter of 2022, led by higher sales at our Air Pollution Control (APC) business segment,” said Vincent J. Arnone, President and CEO. “Selling, general and administrative expenses declined, our operating loss narrowed, and we ended the second quarter with $33.3 million in total cash and cash equivalents, and no debt. We announced $3.6 million of new APC awards during the quarter and commenced operations of a new FUEL CHEM TIFI® Targeted In-Furnace Injection system at a coal-fired unit in the western United States. We also validated the best-in-class oxygen transfer efficiency of our Dissolved Gas Infusion technology; these results, which have been attested to by two independent water treatment experts, will be available in a soon to be published white paper.”

Q2 2022 Consolidated Results Overview

Consolidated revenues for the second quarter ended June 30, 2022 (“Q2 2022”) rose to $6.4 million from $5.2 million in the second quarter of 2021 (“Q2 2021”), reflecting a $1.8 million increase at APC, driven by the timing of project execution and new APC orders. Consolidated revenues were partially offset by a $0.6 million decline in revenues at FUEL CHEM, due to the loss of one customer from permanent plant retirement and unforeseen plant outages.

 

Gross margin for Q2 2022 was 42.1% of revenues compared to 49.5% of revenues in Q2 2021, reflecting lower gross profit margin at both operating segments.

SG&A expenses fell to $2.9 million in Q2 2022 from $3.0 million in Q2 2021.

Operating loss narrowed to $(0.5) million from an operating loss of $(0.7) million in Q2 2021.

Net loss in Q2 2022 was $(0.4) million, or $(0.01) per share, compared to net loss of $(0.8) million, or $(0.03) per share, in Q2 2021.

APC segment revenues rose to $2.7 million from $1.0 million in Q2 2021, for the reasons cited above. APC gross margin in Q2 2022 was 34.2% compared to 48.6% in Q2 2021, due to a modification in product and project mix.

FUEL CHEM segment revenues were $3.6 million compared to $4.2 million in Q2 2021, for the reasons cited above. Segment gross margin in Q2 2022 was 48.0% compared to 49.7% in Q2 2021, due to lower revenues and higher material, freight, and labor cost.
Adjusted EBITDA loss was $(0.2) million in Q2 2022 compared to Adjusted EBITDA loss of $(0.6) million in Q2 2021.

Consolidated Backlog

Consolidated backlog at June 30, 2022, rose to $10.5 million from $9.1 million at December 31, 2021.

Financial Condition

At June 30, 2022, cash and cash equivalents were $31.3 million, restricted cash equivalents were $2.0 million, stockholders’ equity was $44.6 million, or $1.47 per share, and the Company had no long-term debt.

Study Validates Oxygen Transfer Efficiency of Dissolved Gas Infusion (DGITM) Technology

Fuel Tech’s DGI technology is an innovative alternative to current aeration technologies. DGI utilizes two patent-pending technologies to ensure optimal gas delivery to target water and wastewater process applications. The first is a next generation pressurized saturator for gas transfer to a slipstream of water, and the second is an innovative channel injector delivery system to distribute the gas-saturated slipstream with minimal gas loss to the water treatment reservoir.

In a soon-to-be-published white paper verified and certified by two independent third party experts, DGI demonstrated that greater than 99% of the oxygen supplied to the DGI system was delivered to the treatment reservoir as dissolved oxygen with no loss to the atmosphere. DGI’s channel injector was fully capable of transferring oxygen-infused water to the treatment reservoir while only being placed twenty-four inches below surface level, without any measurable loss of oxygen to the environment or any delay in flow of oxygen to react in the aqueous phase.

DGI has the potential to displace or enhance traditional aeration technologies by:

 


The benefits to be derived from the application of DGI are many and include regulatory compliance, increased treatment capacity and the avoidance of material capital spending, water preservation, the minimization of chemical utilization, odor control and improving overall water quality for humans and wildlife.

Siemens Reports Strong Top Line Momentum And Solid Execution – Outstanding Free Cash Flow  

Siemens made significant progress as a focused technology company in the third quarter (ended June 30, 2022). The company leveraged growth opportunities in many key markets despite a continuing complex macroeconomic environment influenced by economic sanctions on Russia, high inflation and effects associated with the coronavirus pandemic. In addition, Siemens continued to avoid larger disruptions due to supply chain risks associated with electronics components, raw materials and logistics.
  

Siemens continues to expect profitable growth of its Industrial Business to drive basic earnings per share from net income before purchase price allocation accounting (EPS pre PPA). Following the €2.7 billion non-cash impairment of the company’s stake in Siemens Energy AG in the third quarter of the fiscal year, the guidance is adjusted to include the corresponding earnings impact of €3.37 per share, resulting in a range for EPS pre PPA of €5.33 to €5.73. This range represents Siemens’ original guidance for EPS pre PPA of €8.70 to €9.10, excluding this impairment.

“We captured significant opportunities in a market environment with ongoing high demand. Our strong top line momentum continued, with a comparable order growth of 20 percent since the beginning of fiscal 2022. This shows: Our business is attractive and grew once again. We have the right offerings and the right strategy to be successful even in uncertain times,” said Roland Busch, President and Chief Executive Officer of Siemens AG. “We made significant progress as a focused technology company in the third quarter with the launch of our open digital business platform, Siemens Xcelerator, accelerating the digital transformation of our customers. We also acquired Brightly Software, an outstanding software-as-a-service player in the building space, which perfectly complements our leading position in smart buildings.”

“Our continued top line momentum translated into a record, high-quality and high-quantity order backlog of €99 billion. We again achieved outstanding Free cash flow of €2.3 billion, which further underscored our financial strength. In addition, we consistently and successfully implemented our portfolio optimization and sharply accelerated our share buyback program,” said Ralf P. Thomas, Chief Financial Officer of Siemens AG.

Solid execution – outstanding Free cash flow

In Q3, Siemens increased revenue 4 percent on a comparable basis – that is, excluding currency translation and portfolio effects – to €17.9 billion (Q3 2021: €16.1 billion). Orders grew 1 percent on a comparable basis to €22.0 billion (Q3 2021: €20.5 billion) and 20 percent on a comparable basis since the start of the fiscal year to €67.2 billion (Q1-Q3 2021: €52.3 billion). At 1.23, the book-to-bill ratio was again at a high level. The order backlog totaled €99 billion – a new record and of a high quality.

Profit Industrial Business climbed 27 percent to €2.9 billion (Q3 2021: €2.3 billion), including a gain of €739 million from the sale of Yunex Traffic. The profit margin at the Industrial Business improved to 17.0 percent (Q3 2021: 14.9 percent). The net loss totaled €1.5 billion (net income in Q3 2021: a positive €1.5 billion). This decline was due to a €2.7 billion nontax-deductible impairment of the stake in Siemens Energy and Russia-related impacts totaling €0.6 billion. Corresponding basic earnings per share before the effects of purchase price allocation accounting were a negative €1.85 (Q3 2021: a positive €1.89). Excluding the burden relating to the impairment of the stake in Siemens Energy, they totaled a positive €1.52.

At €2.3 billion, Free cash flow all-in from continuing and discontinued operations for the Siemens Group again reached an excellent level (Q3 2021: €2.3 billion), with the Industrial Business posting strong Free cash flow of €2.5 billion (Q3 2021: €2.4 billion). As a result, the strength of Siemens’ internal financing was also demonstrated once again in Q3. 

Strong growth at Digital Industries and Smart Infrastructure

At Digital Industries, orders increased by a total of 32 percent on a comparable basis across all businesses and regions to €6.5 billion due to ongoing growth momentum in key market segments. Revenue also rose by a total of 12 percent on a comparable basis in all business areas and regions to €4.9 billion, with the strongest growth contributions coming from the motion control and factory automation businesses. At €901 million, profit was 6 percent above the figure for the prior-year quarter, while the profit margin was 18.3 percent. Profitability was held back primarily by shortages for high-margin electronics products and by lower revenue in the product lifecycle management business and higher expenses related to cloud-based activities, including the impact of the transition of parts of the business to software-as-a-service.

At Smart Infrastructure, orders increased 26 percent on a comparable basis to €5.5 billion. Growth was generated across all businesses and in all three reporting regions, with a particularly strong contribution from the U.S., driven primarily by continuing strong demand for data centers. Revenue increased 10 percent on a comparable basis to €4.4 billion across all businesses, with the largest contribution from the electrical products business. On a geographic basis, growth was driven by the Americas and Europe, while revenue in China declined on a comparable basis due to COVID-19-related lockdowns. Profit surged 31 percent to €562 million (Q3 2021: €428 million). All businesses contributed to this strong performance, which was mainly due to higher revenue and greater capacity utilization as well as cost reductions achieved through the execution of the previously announced competitiveness program. The profit margin increased to 12.9 percent (Q3 2021: 11.4 percent).

Mobility won orders of €2.8 billion (Q3 2021: €5.1 billion), whereby order intake in the prior-year quarter had been extraordinarily high due to a major order of €2.8 billion in the Americas. In Q3 2022, revenue rose 4 percent on a comparable basis to €2.5 billion (Q3 2021: €2.3 billion), while profit of €704 million benefited primarily from a €739 million gain from the sale of Yunex. The profit margin climbed to 28.7 percent. 

Outlook adjusted

For the Siemens Group, growth in comparable revenue of 6 percent to 8 percent, net of currency translation and portfolio effects, and a book-to-bill ratio above 1 are still expected.

Siemens continues to expect profitable growth of its Industrial Business to drive basic EPS from net income before purchase price allocation accounting (EPS pre PPA). Following the €2.7 billion non-cash impairment of the company’s stake in Siemens Energy AG in the third quarter of the fiscal year, the guidance is adjusted to include the corresponding earnings impact of €3.37 per share, resulting in a range for EPS pre PPA of €5.33 to €5.73. This range represents Siemens’ original guidance for EPS pre PPA of €8.70 to €9.10, excluding this impairment.

Digital Industries continues to expect to achieve comparable revenue growth of 9 percent to 12 percent for fiscal 2022 and a profit margin of 19 percent to 21 percent.

Smart Infrastructure continues to expect comparable revenue growth of 6 percent to 9 percent for fiscal 2022 and a profit margin of 12 percent to 13 percent. 

Mobility continues to expect revenue for fiscal 2022 on the prior-year level. The profit margin is now expected to be 7.5 percent to 8.5 percent (previously 10 percent to 10.5 percent).

This outlook excludes burdens from legal and regulatory matters.

Thermax Group Registers Substantial Growth in Revenue and Order Book in Q1

For the first quarter of FY 2022-23, Thermax Group posted a consolidated operating revenue of Rs. 1,654 crore (Rs. 1,052), up 57%. Profit after tax (PAT) stood at Rs. 59 crore, up 40% as compared to Rs. 42 crore in the corresponding quarter of FY 2021-22.

As on June 30, 2022, the order balance for the quarter was Rs. 9,554 crore (Rs. 6,109 crore), up 56%. Order booking for the quarter was 36% higher at Rs. 2,310 crore (Rs. 1,696 crore). The performance was driven by strong order inflow from diverse sectors, including refineries, steel, power, and chemicals. In addition, Thermax witnessed an upward trend in demand from sugar/distilleries and paper & pulp industries for green offerings.

On a standalone basis, Thermax Limited posted an operating revenue of Rs. 947 crore during the quarter, 33% higher as compared to Rs. 710 crore in the corresponding quarter, last year. Profit after tax for the quarter was Rs. 24 crore (Rs. 31 crore) down 23%. The profitability was impacted due to the increased commodity and freight costs in the Chemical segment. Order booking for the quarter was 102% higher at Rs. 1,707 crore (Rs. 843 crore). Order balance on June 30, 2022, stood at Rs. 6,981crore (Rs. 3,642 crore), up 92%.

During the quarter, Thermax concluded a major order of Rs. 522 crore for utility boilers and associated systems for a petrochemical complex in Rajasthan.

 

 

FGD and DeNOx Newsletter No. 530