Siemens Energy Raises Mid-Term Targets Amid Demand for Grid Technologies
Revenue is likely to grow at a high single-digit to low double-digit percentage, with a profit margin of 10 to 12 per cent by fiscal 2028, the company said on Tuesday (Nov 12). Siemens Energy had previously predicted a profit margin of 8 per cent or above.
Rebound from Wind Turbine Division
The German company, which makes transformers and power lines, is turning the page on longstanding problems at its Gamesa wind turbine unit, where faulty wind turbines led to massive losses that overshadowed profits in its other businesses. With a broad restructuring under way, the company confirmed that it still sees Gamesa breaking even in fiscal 2026.
Revenue and Net Income Growth
In fiscal 2024, revenue rose by 13 per cent, while net income was 1.3 billion euros (S$1.8 billion), partly driven by selling off assets. Siemens Energy, which also produces and services gas turbines for power plants, said earlier it expected proceeds of around three billion euros this fiscal year from such sales. Among these was its stake in an Indian joint venture and its high-voltage components unit, Trench.
Restructuring Efforts
Gamesa posted a loss of 1.8 billion euros, before special items, in the twelve months to September, with Siemens Energy citing a temporary sales pause and restructuring costs that dragged on earnings. The wind unit is planning to reduce output, focus on European and US markets and slash as many as 4,100 jobs, or about 15 per cent of its workforce.
Mid-Term Outlook
For fiscal 2025, Siemens Energy expects comparable revenue to expand as much as 10 per cent, with strong growth in electricity consumption driving demand for its products. The company still expects a loss of around 1.3 billion euros, excluding special items, in Gamesa, while net income for the whole group is expected to be around break-even.
Share Price Growth
The company’s share price has more than tripled this year as it managed Gamesa’s problems and reported growth in its gas-turbine and electric-grid units. Orders for circuit breakers, transformers and battery storage systems have surged as the boom in artificial intelligence drives the construction of power-hungry data centres.
Uncertainty in Wind Industry
That growth will remain crucial for Siemens Energy as the wind industry faces uncertainty – particularly in the US, where President-elect Donald Trump has opposed the development of offshore turbine farms.
Quarterly Performance
For the company’s fiscal fourth quarter to September, Siemens Energy’s revenue rose 17 per cent to 9.74 billion euros, in line with analyst estimates. Orders rose 42 per cent compared to a year earlier.
Conclusion
Siemens Energy is set to grow its revenue and profit margins in the mid-term, driven by strong demand for its grid technologies and gas turbines. While the wind turbine division is still undergoing restructuring, the company’s efforts to streamline its operations and focus on high-growth markets will likely yield positive results in the future.
FAQs
Q: What is Siemens Energy’s revenue growth expectation for fiscal 2028?
A: Revenue is likely to grow at a high single-digit to low double-digit percentage, with a profit margin of 10 to 12 per cent.
Q: When does Siemens Energy expect its wind turbine unit, Gamesa, to break even?
A: Siemens Energy expects Gamesa to break even in fiscal 2026.
Q: What is the company’s share price growth this year?
A: The company’s share price has more than tripled this year.
Q: What is the reason behind the uncertainty in the wind industry?
A: The wind industry faces uncertainty – particularly in the US, where President-elect Donald Trump has opposed the development of offshore turbine farms.
Q: What is Siemens Energy’s quarterly performance for the fiscal fourth quarter?
A: For the company’s fiscal fourth quarter to September, Siemens Energy’s revenue rose 17 per cent to 9.74 billion euros, in line with analyst estimates. Orders rose 42 per cent compared to a year earlier.
