Siemens Energy (LON:0SEA) reported a strong second quarter of fiscal 2026, with record orders and improved key financial indicators, while management said geopolitical tensions in the Middle East have had only a limited financial impact on the company to date.
Tim Proelgoebe, who moderated the media call, said Siemens Energy posted record orders of EUR 17.7 billion in the quarter and that its order backlog reached EUR 154 billion, up by another EUR 8 billion from the prior year. He said net income was EUR 835 million and free cash flow was almost EUR 2 billion.
Middle East impact seen as limited
Chief Executive Christian Bruch said he recently traveled to the Middle East, where Siemens Energy has about 4,000 employees, to assess safety conditions and meet with field service teams. He said the company has taken precautions to protect employees while continuing to operate power plants and industrial installations in the region.
“I take great pride in how our team has resolved the situation there or is dealing with it,” Bruch said, adding that customers have also appreciated the company’s ability to keep operations running.
Asked about the business impact of the conflict, Bruch said the financial effect has been “almost negligible.” He said Siemens Energy has seen some higher transportation and transaction costs, but “nothing that’s significant.”
Bruch said orders continued in the region during the quarter, including in Oman, the United Arab Emirates and Saudi Arabia. Some projects in the oil and gas sector within the Transformation of Industry business have shifted sideways because of the situation, but he said he does not expect medium-term order intake to change materially.
Bruch also said Siemens Energy’s equipment and installations had not been damaged by attacks. He described one case in which falling debris landed near a company installation after anti-drone defenses operated, but said nothing was damaged. He also noted increased demand for some infrastructure, including a Saudi Arabian pipeline toward the Red Sea, in which Siemens Energy is involved.
Data center demand supports gas turbine orders
Management said data centers were an important driver of order intake. Bruch said data centers represent roughly 20% to 25% of gas turbine order intake, while in Grid Technologies the share is below 10%. He said Siemens Energy aims to maintain a balanced and diversified order portfolio rather than focus only on data centers.
Bruch described the data center customer base as broad, including conventional project developers, technology companies directly involved in operations, and gas suppliers seeking to convert gas into electricity. He said Poland has developed positively for Siemens Energy, not only in gas but also in offshore wind and grid-related business.
On delivery times, Bruch said the roughly four-year timeline for gas turbines still applies, though the company is trying to increase flexibility and deliver smaller turbines more quickly where possible. For large transformers, he said delivery times are about three to four years. Siemens Energy is increasing capacity, including through new plants, and Bruch said he expects delivery times to normalize before the end of the decade.
Gamesa breakeven target remains weighted to year-end
Siemens Gamesa remains a key focus for investors and management. Bruch said the wind business is not expected to cross the breakeven line in the third quarter and will likely need the fourth quarter as well.
He said the main drivers to reach breakeven are improving service profitability, bringing quality costs under control in onshore wind, increasing productivity in offshore factories and reducing corporate costs. Bruch also said the expected EUR 300 million in synergies from the takeover of Siemens Gamesa minorities are “well on track.”
Bruch acknowledged that wind order intake has been slightly lower than expected, particularly in offshore wind. He said 2026 had always been expected to be a low year, with more orders anticipated in 2027, and that some orders have shifted from 2026 into 2027, including in Asia.
Bruch said he was not concerned about Siemens Gamesa’s ability to secure enough offshore orders going forward, but he expressed concern that planned projects are not reaching final investment decision quickly enough. He cited higher interest rates as a challenge for projects auctioned years ago under different financing conditions and said policymakers should consider steps to ease investment decisions.
Asked about market speculation on wind industry consolidation and a proposal to create a European wind turbine leader, Bruch declined to comment, saying the discussion has been ongoing for a long time. He also said there are currently no plans to demerge Siemens Gamesa.
Tariffs and buyback update
Bruch said Siemens Energy is reviewing U.S. tariff matters and has registered its interest in clarifying possible refunds. He noted the company previously discussed a lower triple-digit-million-euro amount, including EUR 200 million, but said many tariffs were paid by customers or are governed by customer agreements.
“We do not expect any major net effect on our bottom line,” Bruch said, describing the process as more administrative than a special earnings item. He also said the company’s annual guidance does not assume any tariff refunds.
Chief Financial Officer Maria Ferraro said Siemens Energy is accelerating its share buyback after strong free cash flow in the first half, including just under EUR 3 billion in the first quarter and about EUR 2 billion in the second quarter. She said the company had repurchased about EUR 1.8 billion of shares as of the prior week and would continue to buy up to an additional EUR 1 billion in the current fiscal year.
Ferraro said that effectively brings forward part of the buyback volume previously expected next year. She said Siemens Energy is still sticking with its EUR 6 billion buyback plan through 2028.
Transformation of Industry mixed, hydrogen remains weak
Bruch said the weaker order intake in Transformation of Industry is limited in nature and partly tied to customer hesitation in the Middle East. He said postponed orders should be realized in the near future and that he remains confident in a healthy book-to-bill ratio of 1 or above.
Within the segment, Bruch said compression and steam are developing well, with oil and gas infrastructure investment providing support. He said steam has reached a high level of profitability and could see new growth opportunities, including from data center applications using turbines.
However, Bruch said the electrolyzer business remains weak. He said Siemens Energy will stick with the technology, but hydrogen is “not really yet a commercial market” and he does not expect that to change in the near future.
About Siemens Energy (LON:0SEA)
Siemens Energy AG operates as an energy technology company worldwide. It operates through Gas Services, Grid Technologies, Transformation of Industry, and Siemens Gamesa segments. The company provides gas and steam turbines, generators, and heat pumps, as well as performance enhancement, maintenance, customer training, and professional consulting services for central and distributed power generation; and high voltage direct current transmission systems, offshore windfarm grid connections, transformers, flexible alternating current transmission systems, high voltage substations, air and gas-insulated switchgears, digital grid solutions and components, and storage solutions.
