Siemens Energy Posts €4.1bn Net Income, Lifts 2030 Targets

Siemens Energy (LON:0SEA) posted net income of €4.1 billion for fiscal 2026 and more than tripled its fourth-quarter profit, setting higher revenue, margin and cash flow targets through 2030 on stronger execution in gas and grid businesses.

Fourth-quarter revenue rose 21% on a comparable basis to €12.8 billion, while profit before special items climbed to €1.5 billion. For the full year, comparable revenue grew 15.5%, the profit margin before special items reached 12.4%, and free cash flow before tax totaled €8.8 billion. That margin performance is the equivalent of adding roughly €2 billion of pre-specials profit on a revenue base of about €44 billion.

President and CEO Christian Bruch attributed the results to improved project delivery, higher production and the conversion of higher-quality orders. Siemens Gamesa, the wind business, achieved a slightly positive full-year profit before special items after its second consecutive profitable quarter.

What did the company guide for 2027 and 2030?

For fiscal 2027, Siemens Energy expects comparable revenue growth of 14% to 16% and a profit margin before special items in the same range. It forecasts net income of around €5 billion and free cash flow before tax of approximately €10 billion.

By fiscal 2030, the company targets revenue above €70 billion, compared with approximately €44 billion in fiscal 2026, plus a profit margin before special items of 20% to 22%. CFO Maria Ferraro said the 2030 margin target excludes the Siemens brand license fee, while the fiscal 2027 outlook still includes it.

Ferraro said the longer-term margin plan relies on higher-margin orders already in the backlog, improved productivity, cost control, recovery at Gamesa and removal of the license fee. She stated the plan does not require another significant increase in pricing.

Cumulative free cash flow before tax should reach about €55 billion from fiscal 2027 through 2030. Ferraro said roughly 75% of the forecast €10 billion in fiscal 2027 cash flow would come from profit, with customer advances and slot reservation agreements also contributing.

How strong is the order book?

Full-year orders rose 19% on a comparable basis to €68.1 billion, lifting the group backlog to €164 billion. Ferraro said the backlog covers around 85% of expected fiscal 2027 revenue. Data center-related customers account for approximately €15 billion of orders, or less than 10% of the total.

Gas Services revenue rose 20.3% to €14.5 billion with a 16.4% margin before special items; Grid Technologies revenue grew 26.2% to €14.1 billion at an 18.9% margin. For 2030, the company targets margins of 25% to 27% in Gas Services and 24% to 26% in Grid Technologies.

Bruch said grid pricing was flattening in some areas, making factory productivity and cost improvements increasingly important. Ferraro added that pricing varies by geography and product, with large power transformers still commanding high prices.

In Gas Services, Siemens Energy secured 42 gigawatts of new unit orders in fiscal 2026. Year-end commitments totaled 104 gigawatts, including 39 gigawatts under slot reservation agreements (deposits reserving production capacity) that management expects to convert into firm orders in fiscal 2027 at better margins than fiscal 2026 orders.

Asked about possible data center project delays, Bruch said he had seen no slowdown in customer demand and no impact from U.S. midterm elections. The company can reallocate reserved production slots when contractual terms allow if projects stall.

Bruch also highlighted the service opportunity: Gas Services revenue from servicing equipment is expected to more than double by fiscal 2035. Ferraro cautioned that rising input costs must factor into future service margin assessments.

What is happening with Gamesa and Transformation of Industry?

Siemens Gamesa generated €10.6 billion in revenue at a 0.1% margin before special items, with free cash flow of negative €1.6 billion. Targets: 0% to 2% margin in fiscal 2027, 8% to 10% by fiscal 2030, and cash-positive operations by fiscal 2028.

Bruch described break-even as a starting point rather than the end of the turnaround. He said the wind business ultimately needs to contribute to and be accretive to Siemens Energy, while the 2030s outlook for onshore and offshore markets remains uncertain.

The company also plans to separate its Transformation of Industry business and bring in a co-investor. Bruch said discussions with potential co-investors start early next year, with Siemens Energy retaining a meaningful minority stake.

How much returns to shareholders?

Siemens Energy will propose a fiscal 2026 dividend of €2.30 per share, up from €0.70 a year earlier, and repurchased €3.1 billion of shares during the year. Through fiscal 2030, it plans to return more than €25 billion to shareholders via a 40% to 60% dividend payout of net income and buybacks of up to around €3 billion per year.

Ferraro said approximately €3.5 billion to €4.5 billion is earmarked to raise Siemens Energy's stake in Siemens Energy India Limited from 16% to 51% in 2028.