Siemens Energy AG Unsponsored ADR ((SMNEY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Siemens Energy AG’s recent earnings call painted a generally positive picture, highlighting substantial growth in revenue and order backlog, alongside significant improvements in profit margins. Despite these optimistic developments, challenges persist, particularly with Siemens Gamesa and the impact of tariffs. Nevertheless, the company remains hopeful about achieving its future growth and profitability targets.
Record Order Backlog
The company reported a remarkable 75% increase in its order backlog, reaching EUR 138 billion. This substantial backlog provides Siemens Energy with good visibility and confidence for fiscal year 2026 and beyond, indicating a strong pipeline of future business.
Significant Revenue Growth
Siemens Energy experienced a robust 15% growth in revenue, driven by strong demand across its core segments. The fiscal year revenue nearly hit EUR 40 billion, showcasing the company’s ability to capitalize on market opportunities and expand its financial footprint.
Profit Margin Improvement
The earnings call highlighted a notable 500 basis point improvement in profit margins year-over-year, with a 350 basis point enhancement since the company’s listing. This improvement underscores Siemens Energy’s operational efficiency and strategic focus on profitability.
Strong Free Cash Flow
In Q4, Siemens Energy generated over EUR 1.3 billion in free cash flow, significantly surpassing the previous year’s figures. This strong cash flow performance reflects the company’s effective financial management and ability to generate liquidity.
Ambitious Future Targets
Looking ahead, Siemens Energy has set ambitious targets for fiscal year 2028, aiming for a profit margin before special items of 14% to 16% and revenue growth in the low teens percentage range. These targets demonstrate the company’s commitment to long-term growth and profitability.
Siemens Gamesa Challenges
Despite overall positive performance, Siemens Gamesa faced significant challenges, ending the fiscal year with a loss of approximately EUR 1.3 billion. These losses were primarily attributed to tariffs and operational difficulties, highlighting areas that require strategic attention.
Tariff Impacts
Tariffs have had a detrimental effect on profits, particularly impacting Siemens Gamesa with a high double-digit million euro amount. This underscores the external challenges the company faces in maintaining its profitability.
Forward-Looking Guidance
The company provided detailed guidance for the upcoming fiscal years, projecting a 15% revenue growth for fiscal year 2025 and a significant margin improvement of 500 basis points year-over-year. For fiscal year 2026, Siemens Energy aims for a profit margin before special items of 9% to 11% and revenue growth between 11% and 13%. By fiscal year 2028, the company targets low teens percentage range revenue growth and a profit margin before special items of 14% to 16%. Strategic investments in capacity expansion and partnerships were also discussed as part of their growth strategy.
In conclusion, Siemens Energy AG’s earnings call reflects a positive sentiment with substantial growth in revenue and order backlog, alongside improved profit margins. Despite challenges with Siemens Gamesa and tariff impacts, the company remains optimistic about its future targets and strategic initiatives. Investors and stakeholders can look forward to the company’s continued focus on growth and profitability.