Investing.com -- Siemens Energy has raised its guidance for annual pre-tax free cash flow, citing solid returns from its fiscal first-half, sending shares higher in European trading on Wednesday.
The energy spin-off from industrial conglomerate Siemens said that demand for electricity continued to develop "strongly" during the six month period. Its power grids and industrial transformation units both saw "substantial and significant growth" in particular, the firm noted.
Orders at these divisions and its gas services segment beat consensus forecasts by 6.6%, analysts at Morgan Stanley said. Overall orders slipped by 21.8% due mainly to weakness at its Siemens Gamesa wind turbines unit, although the figure still topped consensus projections.
The company flagged that onshore orders at Siemens Gamesa are still being impacted by a temporary interruption of sales for its 4.X and 5.X turbine platforms. Both models are not currently on sale, although Siemens Energy said the 4.X is on track to return to markets by the end of September.
Siemens Energy also laid out broader plans to revamp Siemens Gamesa, which has been beset by a series of technical issues and broader inflationary pressures that led its parent to take a bailout from the German government. Along with cost cuts, Vinod Philip has been tapped as the new CEO of Siemens Gamesa, replacing Jochen Eickholt, who has led the business since its creation in 2017.
Siemens Gamesa's operations will be focused on Europe and the U.S. going forward, Siemens Energy added, in a sign that it was sticking to a previously-promised plan to streamline the unit.
Following the quarterly returns and these announcements, Siemens Energy lifted its outlook for operating profit and sales in 2024. It also sees a positive free cash flow of up to 1 billion euros in 2024 financial year, reversing prior guidance for a negative cash position of 1 billion euros.
"The material positive in these results is around Free-cash-flow," the Morgan Stanley analysts said.