Good morning, everyone, and welcome to today's Q2 Conference Call. This is not taking place in Berlin as usual, but it's in Munich this time because the 8th of May is a legal holiday in Berlin this year. Berlin is commemorating the end of World War II 80 years ago. At Siemens Energy, and in particular our CEO, Christian Bruch, are supporting an initiative for this important day, supported by nearly 50 German companies, and I'd like to draw your attention to this: all people who lost their lives or persecuted during the rule of terror by the Nazis, or also of the crimes and destructions which cost more than 60 million people their lives. 60 million.
I'd also like to draw your attention to the fact that the takeover by the Nazis in 1933 was also caused or fostered by the failure of companies that were often only thinking about their own advantages. 80 years later, we as a company are aware of the responsibility we have as a result. There is no place for hate, exclusion, or anti-Semitism which existed then and still exists today. There is no place for this in our society. CEO Christian Bruch has also published a post, as did 48 other CEOs. Thank you for publishing that post and that initiative. I'd now like to say that it's difficult to find a good transition to today's conference call. We're talking about the quarterly figures for the second quarter. We gave you a preliminary amount on the 16th of April, but at 7:00 A.M. this morning they were published.
In addition to CEO Christian Bruch, we also have our CFO, Maria Ferraro, and they will both be available to answer your questions after the presentation. Mr. Bruch will be speaking German, and Ms. Ferraro will be speaking English. We have two webcasts: an original line and an English line, and the interpreters will interpret everything into English for you. Ms. Ferraro will also be speaking in the English channel. For any questions and answers afterwards, you have a separate telephone number. This was what journalists could do. We gave you the link for this with the invitation, and you can also sign up for that now if you like. So, to avoid any acoustic feedback, we'd like to make sure that you keep the telephone line on mute.
The presentation is something that you'll be able to download after the presentation on our website, and you will also see additional charts with further financial details. Please remember that we won't be publishing a text on the website because we will be speaking freely. I'd also like to remind you of our Safe Harbor Statement, our forward-looking statements, which you can find on the second page of our quarterly presentation, and now over to you, Mr. Bruch.
Thank you very much. Good morning, and thank you for dialing in again today. As usual, we will be offering you an overview of the last quarter's figures today. I'll begin with an overall view, and then Maria will go into the detailed numbers afterwards. As you've already heard, on April 16th, we published our preliminary figures on an ad hoc basis. So I'm sure that you're already aware of a lot of what we will be explaining today. We are still operating in an extremely attractive market environment. Both rising electricity demand and the replacement of older infrastructure continue to drive strong demand for our products. Our focus is therefore on profitable growth. We are, of course, concurrently concerned about geopolitical uncertainties and, in particular, the tariff discussions in the U.S. The situation remains difficult to assess.
However, we currently assume that the financial impact of the tariffs on our business activities will be manageable. I will say more about this in a moment. Finally, I would like to address a few points regarding energy policy in Germany that we believe need to be tackled now. But I would like to start today with an anniversary on my own. On the right hand of this slide, you can see a picture from 1991 showing the installation of the world's first offshore wind turbine. In 1991, in the Danish Vindeby, the first ever offshore wind farm was built with our turbines. Eleven offshore turbines were installed at that time, each having a capacity of 500 kilowatts. A lot has happened since then, and we have just installed our 5,000th offshore turbine at the Sofia wind farm, around 200 kilometers off the coast of the U.K.
Our current standard turbine has a capacity of 15 MW, which is 30 times that of our first turbine. Since 1991, we have installed a total capacity of 27 GW off the coasts of 14 countries. This amount, you can calculate it, is approximately enough to supply around 10 million households with green electricity. These figures make us proud as a company and make me proud specifically, and I would therefore like to congratulate the entire Siemens Gamesa offshore team on this important anniversary. So, coming to the second quarter now, it was the most successful quarter since Siemens Energy was founded in 2020. I would like to express my particular thanks to the 100,000 employees of Siemens Energy who work for our customers every day. Compared with previous quarters, we were able to further increase our already good quarterly order intake to EUR 14.4 billion.
That is the highest quarterly order intake since Siemens Energy was founded. In particular, the gas business had a record quarter. Gas services accounted for half of all orders in the January to March period. I am particularly pleased that we have once again achieved a good regional distribution of orders. For example, in Saudi Arabia, we were able once again to book large orders for gas turbines worth approximately EUR 1.6 billion in that quarter. In the U.S., we see huge demand, which is being further increased by the power requirements of data centers. We have never seen the high demand for gas turbines. Now, it is unprecedented as how it was over the past 10 years. Overall, our order backlog has now reached a new high of 133 billion EUR.
What is particularly important here is that we were able to significantly improve the margin quality in the order backlog. The fact that around half of the order backlog is long-term service business also provides stability. On a comparable basis, we were able to increase revenue by more than 20% to EUR 10 billion per quarter compared to the same quarter of the previous year. The profit margin before special items amounted to 9.1%, leaving a net income of approximately EUR 501 million in the second quarter. Due to these very good results, we raised our forecast on April 16th in all points apart from the profit margin before special items at Siemens Gamesa, and Maria will go into this in detail in just a moment. In these turbulent geopolitical times, our broad regional positioning and product base is a major strength for us as a company.
The signs in the power market continue to point towards growth, and we are seeing this in many countries around the world. If you look at the distribution of our revenue in the first half of the year, you will see that Siemens Energy is not dependent on any single market. Our risks are broadly diversified. Of course, Europe accounts for the majority of our revenue, but it is also a region with over 40 countries. The U.S. is our largest single market and accounts for approximately one-fifth of our sales. You can see a similarly diverse list if you look at some of our orders in the second quarter and our product areas. For example, in the second quarter, we had an order volume of 9.5 GW in the Gas Services segment.
We sold a total of more than 61 gas turbines ranging from 15-500 MW in the last quarter, really leveraging our broad portfolio for Gas Services here. As of March 31st, the order backlog was 29 GW, with further reservations for around 21 GW. We expect to be able to convert these reservations into orders by the end of the next fiscal year. In the Grid Technologies segment, we booked a major order for the grid connection of offshore wind farms in the U.K. That is a project off the coast of the U.K. with RWE as the customer and is already being implemented. We received an order from an energy supplier in the U.S. for energy storage based on compressed air. This concept has only been implemented in a few plants to date.
We believe that this, known as compressed air energy storage, can play a role in long-term energy storage in the future. In the wind sector, we won orders for onshore wind turbines in Japan in the last quarter. As the turbines are located on the island of Hokkaido in northern Japan, where extremely strong winds prevail, our direct drive turbines are being used there. This means that the rotor is directly connected to the gearbox. This is different to the 4.X and 5.X turbines that we have discussed time and again. These direct drive turbines enable more efficient energy transmission and reduce maintenance costs. It is a very successful product in Japan. In order to meet the increased demand, we are investing in expanding our capacities worldwide. Last time, I mentioned the expansion of several factories for network technology and large gas turbines.
Additionally, at our plant in Finspång, Sweden, we are now expanding our capacities for medium-sized gas turbines. At the same time, we are fine-tuning our portfolio. In India, we have transferred our onshore wind activities to a joint venture with the investor TPG and other Indian investors. We are still invested with a 10% stake in the new company, but we'll continue to focus on a few core markets in the onshore business. What is known as closing is expected in 2026 for this transaction. The first half of the year was also characterized by rising electricity demand from data centers. Demand is particularly strong in the U.S. For us, this means in the first half of the year, we have gas turbines with a total of 8 GW for data centers, 2 GW as booked orders, and 6 GW as firm reservations.
As Siemens Energy, we are an attractive partner for data centers because we can offer not only power generation solutions, but also grid connection and stabilization. In addition, we are currently implementing innovative concepts for data centers, such as the use of waste heat. By doing so, we're able to offer our customers attractive solutions across our portfolio. Our broad expertise is particularly helpful to investors and operators of data centers who have not previously been responsible for their own energy solutions. The share of data centers in global electricity consumption will continue to rise from around 1%-1.5% of global demand today to approximately 3% by 2030. The U.S. market offers great opportunities, but of course, we have also been busy with tariff discussions in recent months. Tariffs are never good. The situation remains unclear in terms of impact, and we are naturally not immune to the U.S. government's tariffs as a company.
Like our competitors, our business is based on a global supply chain. However, we have leverage to influence the impact of the tariffs. Firstly, we have a substantial local value creation with eight production sites in the U.S. and employ 12,000 people. We already have approximately 5,000 local suppliers and are constantly increasing this number. We are investing in capacity in the U.S. By the end of the financial year, this will amount to around EUR 500 million over the last three years that we are investing in expansion in the U.S. For the second half of the financial year, we currently anticipate an impact on earnings through tariffs in the high double-digit million EUR range after taking into account mitigation measures. At the moment, we can say that the current situation does not put us at a disadvantage compared to our competitors.
We are certainly moving forward with the opinion that this is manageable, but of course, it is not desirable. With that, over to you for the numbers, Maria.
Christian, good morning, everyone. A very warm welcome also from my side. Thank you for joining us today. So let's start with an overview of our financial performance for the second quarter at group level. As already mentioned, we had another very strong quarter, exceeding market expectation in essentially all major KPIs. The strong market environment led to a substantial increase in orders by more than 50%. Growth was mainly driven by our new unit business at 67%, but also service increased by 30% compared to Q2 of last year. The book-to-bill ratio continues to be strong at 1.45, driving the order backlog, as mentioned, to already another record high of EUR 133 billion. The order backlog is what gives us transparency into our future, and the margin quality of our backlog provides a strong foundation for our fiscal year 2025 outlook, but also for our midterm targets.
Here in the second quarter, we once again saw an improvement in margin quality, and this is reflecting positive pricing developments. In addition, order backlog now covers approximately 94% of our expected revenue for this fiscal year and 77% of our next fiscal year. Looking at revenue, this rose by an impressive 20.7% and reached just shy of 10 billion EUR. This is the highest ever quarterly revenue we've had since the inception of Siemens Energy. All businesses contributed to this growth. The biggest contribution did come from Grid Technologies, where both new units and service increased significantly, with new unit revenue growing by 23% comparable and service grew by 16%. Pricing development was positive and strong in all segments. Our profit before special items increased by more than five times this year or year over year to 906 million EUR, again with all segments increasing sharply.
This was driven by a few things. First, the increased volume. Second, price. And third, the execution, excellent execution of higher margin projects. In addition, in grid technologies, it should be noted that we benefited from a positive timing effect of approximately EUR 100 million, mainly due to a substantial catch-up for one project. A strong new unit service mix in the second quarter contributed to higher profitability in the first half of this year. And please remember, this is in line with our normal seasonality. Free cash flow pre-tax was again stronger than expected at positive EUR 1.4 billion, again improving by just shy of EUR 1 billion year over year. Like in the first quarter, this strong cash flow was driven by profit, project advance payments, and this also includes reservation fees. Just quickly, what are reservation fees? Let me explain.
Due to our strong order backlog, some of our customers now provide us with a reservation fee before booking an order to secure a manufacturing slot for our products or solutions. This gives both parties, ourselves and our customers, planning security because then they know what to expect. We know what product we need to have manufactured and delivered, and it gives them essentially an estimated lead time. The payment is then applied to the order once the order is placed. There is a time limit to the reservation fee, and if for some unforeseen reason the order is not placed or the customer terminates the order, we still keep the payment. This way of reserving manufacturing slots in the environment we're operating in today is standard in many industries. Now, let's take a brief look at the performance of our businesses.
Again, like in prior quarters, you can refer to our website for the complete breakdown, so many details by business area. So just let me start with Gas Services. I want to highlight the order intake, where orders more than doubled. Here, Gas Services, as already mentioned, again benefited from a very strong global gas market with large orders in Saudi Arabia and Taiwan, continued strong demand in the Americas, in the U.S., and significant growth in service. For Gas Services, they recorded a record order backlog at EUR 52 billion, again an all-time high. Q2 revenue was EUR 3.2 billion, just shy of a 19% increase on a comparable basis. Their profit came in at EUR 511 million, an increase of 34% year over year. This resulted in a margin of 16.1%. This is the highest quarterly profit in Gas Services since our spin.
Moving on to grid technologies now, again delivered significant improvements across all KPIs, almost 42% increase in order intake. Order backlog also grew in grid technologies to a new record high of EUR 38 billion. Q2 revenue grew very strongly by just shy of 34% on a comparable basis, again driven by increase in both product and solutions business. Profit for GT before special items came in at EUR 571 million. This is more than doubled compared to fiscal year 2024, and this resulted in a margin just shy of 20% at 19.9%. The improvement in the profit was driven by a few things. Firstly, the strong operational performance of the GT team executing through their backlog and the higher margins in their process order backlog, as well as the one-time topic that I mentioned before of approximately EUR 100 million.
Now looking at Transformation of Industry, Q2 orders EUR 1.6 billion, a 2% decrease versus a very high prior year comparable base. There was a one-time large order last year that was booked. If you take that order out, actually TI is still growing quarter over quarter. Service orders decreased by 17%, but service accounted for half of the total orders in Q2. Profit for TI was EUR 155 million, almost double Q2 of fiscal year 2024, and a strong margin of 11% accompanied that. Profit here was driven by increased volume and scale effects, as well as, again, comparatively higher margin in the process order backlog. Now looking at Siemens Gamesa. Siemens Gamesa is performing in line with expectations.
As always mentioned in large project business, and this is true in Siemens Gamesa, we have a couple of positive and negative one-offs in this quarter, with this quarter having positives being more prominent just from a timing perspective. This is timing in nature, so therefore we still confirm our full year guidance for that business. Just also a quick reminder that on March 26th, we announced the divestment of the majority stake of the Siemens Gamesa India business. This is in line with our objective to focus and de-risk the onshore business, as Christian mentioned. But this did lead to an impairment of EUR 256 million. That's already reflected in special items, so therefore accounted for properly. This was as a result of the difference between the book value of the business and the sales price and was in line with our expectation.
Again, we expect deconsolidation of this by the end of the fiscal year or latest the beginning of next fiscal year. So now looking at strong cash, our strong cash flow generation, where we are now approaching EUR 5 billion in net cash. We had another strong cash flow in the second quarter, again due to higher profitability across the businesses and strong orders. Again, that drives advance payments, in some cases even early payments that were shifted into this quarter, and reservation fees, as I briefly explained before. Also, maybe a quick update on our quality cash outs at Siemens Gamesa. Those amounted to approximately EUR 84 million in the second quarter. Again, we've already given some guidance around the cash outs pertaining to Siemens Gamesa for this fiscal year, where we expect a mid-triple-digit EUR million amount.
Overall, you see here we have 9 billion EUR in cash and cash equivalents, our highest ever, and with stable both long-term and short-term debt, taking into account pensions provision, which also remains stable, this brings us to an adjusted net cash position of 4.7 billion EUR at the end of March compared to an adjusted net cash position of 1.3 billion EUR a year ago. Again, this is a very strong performance in line with our commitment to have a strong balance sheet and a solid investment grade profile as a company, so again, let me briefly summarize. We had a strong start in the first quarter that continued into the second quarter, underpinned by the strong business performance, as you just saw across all of the businesses, across all of the main KPIs, so then moving on to our outlook.
For Siemens Energy as a group, we now expect 13%-15% comparable revenue growth. This was previously 8%-10%, and a profit margin of 4%-6%, previously 3%-5%. This includes, as Christian mentioned, a limited direct impact from tariffs on Siemens Energy profit of up to a high double-digit million EUR amount after mitigation measures. We also now expect net income of up to 1 billion EUR. This was previously at approximately the break-even. This, again, continues to exclude positive special items from the demerger of the energy business from Siemens Limited India. We now expect free cash flow pre-tax of around 4 billion EUR. This was previously up to 1 billion EUR. And of course, all of this does continue to impact the assumptions for our business areas, as outlined in the slide here in front of you.
Of course, we will provide an update on the midterm targets when we present our results for Q4 of fiscal year 2025. With that, that concludes my portion of the psentation, and I'll hand back to you, Christian. Thank you very much.
Vielen Dank, Maria. Zum Abschluss noch ein.
Thank you very much, Maria. Finally, now a few words on what the new government in Germany looks to tackle now in terms of energy policy. We are faced with significant challenges in Germany, and there is no time to lose. With this in mind, the rapid government formation is very positive. I'd like to congratulate Friedrich Merz on his appointment as Federal Chancellor and wish him all the best in office. As a citizen and voter, I also look forward to performance and to the government acting in solidarity with one another. The same applies to all colleagues who are taking on responsibility in the government during this important phase. I am particularly pleased that Katharina Reiche, who has extensive experience in the energy sector, will be heading the Ministry of Economic Affairs. I wish her all the best.
As far as the coalition agreement is concerned, it contains some important regulations that we in Germany need to implement quickly. Firstly, prioritizing tenders for 20 GW gas-fired power plants is a crucial step towards securing energy supplies and advancing the energy transition. We have already lost time on this and need to get started on implementation quickly. It must be ensured that the required amount of electricity is available in Germany at all times, regardless of whether the wind is blowing, the sun is shining, or our neighboring countries need electricity from us. We therefore need a technology-neutral capacity mechanism on the energy market. This must meet market requirements and promote investment in innovative technologies. This is essential to ensure a stable and sustainable energy supply. Wind energy is the basis for energy independence.
It is extremely positive that the targets for the expansion of wind energy have not been reduced. We also welcome the clear statement on the promotion of domestic production and the protection of critical infrastructure in order to avoid new dependencies. Now it's time to work out the details of how exactly this will be implemented. The efficient expansion of the electricity grid is a fundamental prerequisite for the stability of the energy supply and for the energy transition as a whole. We support the continuous review and adjustment of grid expansion to ensure that it meets current and future needs. What is needed above all here is planning security because only then can investment take place. Greater use of digitalization will be important for more efficient use of the grids. This also includes protecting the critical energy infrastructure from cyberattacks.
Five points are therefore crucial: awarding gas-fired power plants, defining capacity market, expanding wind energy, expanding grids, and making optimal use of existing structures through digitalization. In addition, I believe that reducing bureaucracy is a top priority. Germany must once again become the benchmark for the efficient implementation of projects. And looking to Europe, it is important to drive the Capital Markets Union because we are working in a business into which much money must be invested. It is important that we now take action quickly. We all have a role to play in tackling the challenges with confidence and ambition. Siemens Energy is investing in Germany. We are hiring employees, and we depend on their performance and motivation. And with that, back to you, Tim, for the discussion.
Vielen Dank, Christian.
Thank you very much, Christian and Maria. Journalists, you can now ask questions. Let me give you the technical information once again. You can ask questions in person. If you've dialed into the telephone line, we gave you the information for that in the invitation. If you want to ask a question, please press asterisk and one on your keyboard, or you can ask your question in the webcast chat. You can ask your questions in either English or German, and the answer will be in that same language. Asterisk one if you want to ask a question. The first question comes from Christoph Steitz von Reuters. Good morning, Mr. Steitz.
Good morning from Frankfurt. I have a number of questions. I'd like to begin with the tariffs, Mr. Bruch.
This morning, we talked about price increases, and that's why I'd like to hear about some of the tariffs, and you'll be paying some of them as well. So maybe we can see that this might be something where you could tell us whether you can pass on the entire impact of the tariffs or not. Are the price increases below 10%, which is now valid when it comes to the tariffs? And how will the customers accept that? Maybe you could explain that. And another point, we're talking here about how you perceive the U.S. government. Is this a learning curve? Are you optimistic that they will be able to come up with solutions? We see different voices from the economy. We saw a very positive assessment. Others are rather skeptical.
How do you see it when it comes to discussions that you've had with representatives from the economy in the U.S. when it comes to the significance of local content, which you do have?
It'd be really helpful if you could let us know whether the hit you expect from tariffs, is that on a net profit level or an operating profit level? If you could specify, that'd be helpful. And then the last question, you said that you will provide an update to midterm targets along with full year results. I am wondering whether you would describe these midterm margin targets that you've provided us with in November, whether you see them as conservative as of today, because some of the drivers may have changed. If you could kind of provide some color on that, it'd be great. Thank you. Guten Morgen.
Good morning, Mr. Steitz. Thank you for your questions. First of all, let's try to break this down a bit when it comes to the effect of tariffs. First of all, we take a look at the order book that we have, and we have provisions in the contract. If there's a change of law, then of course this effect can be passed on to the customers. That's not the issue at hand right now. And for the new orders, it's always a question: are we in a better or worse condition compared to the competitors? If it's the same, then of course this will have an impact on the price environment in each market. You can see that, yes. And what we're trying to say is that in most of our products, we are quite comparable when it comes to our competitors.
There are certain models where you can say we have a higher import share or a lower import share. So that's why we take a look at this model by model. But that's not really where the effect from the tariffs comes from. Let me put it this way. It's often as a result of older service contracts where certain components are included, where there are no clauses for adaptation. The main message we're giving you is that when it comes to tariffs, it's an annoyance, but it's manageable. And what we take a closer look at now is what are the secondary effects? In other words, what does this mean for the administration in the different ports? How long does it take it to get through customs? What does this mean in macroeconomic terms? So this brings me to the learning curve. It's too early to say right now.
I think that would be premature. But I think the question is, will this help the United States? And I think that the American administration is looking at this as well. In discussions that I had, it went in this direction. It's a question of American jobs. Will it help the American economy? And if it appears that, structurally speaking, things are becoming more expensive in the United States, then I think that there is openness there. But I think it would be too early right now to say we can put a figure on this. What's important, I think, is what we're trying to get across. It's annoying, but it is manageable.
Hello, Christoph, and maybe just to add on to what Christian was just mentioning, in terms of providing maybe the financial context of the tariffs, the upper double-digit impact, of course, is net, right? Of course, there's mitigating actions that we're taking and that we can take, like Christian mentioned, in terms of contractual terms, that will then mitigate the impact of the tariff, so therefore, what you're hearing in the double-digit upper middle range is a net impact, and this will impact different areas of the profit and loss statement, but it would be a direct cost because, as just mentioned by Christian, it could be components that are used in the service business. Of course, that's a cost of sale, so it will impact our operating profit, just to be clear.
In terms of the outlook, and yes, as mentioned, of course, with our revised outlook for this year and the fact that we will provide at the Q4 res ults as per normal, the outlook for next fiscal year, and then, of course, an update on our midterm targets. Looking back at November and where we are today, I mean, our outlook, and we always strive to ensure that this represents the best and accurate picture of the assumptions that we've had at that time, and clearly, based on how things continue to progress, we are facing unprecedented growth and demand in certain areas in our market, and as you know, was outlined a little earlier, it's also very broad-based, so it's not like you can say it's only in one area, in one country, and therefore it's easier, if you'd like, to predict.
This is very broad-based growth and very dynamic, even in light of the, let's say, macroeconomic and geopolitical environment. So what we will endeavor to do, as we always do in Q4, is to really provide then an updated outlook for next year based on what we've seen this year and the half-year results and the outlook and midterm accordingly with what we know at that time. Thanks for the question, Christoph.
Maria, we have another financial question from Cinco Días in Spain. They ask how the sale of Siemens Gamesa in India could lead to a loss of EUR 249 million. Maybe you can explain that.
Yes, thank you very much for that question, and very clearly, of course, it is essentially the sales price less the book value of that investment at the time and other things that go into it that are a little technical in nature, like goodwill and so on, that, of course, was recorded way back at the inception of the India business, but very simply, it's literally sales price less book value.
Thanks. The next question is from Christian Böhmer from the DPA. Good morning, Mr. Böhmer.
Good morning. Considering the good figures and cash flow, you could come up with the idea that the state guarantees might come to an end. In other words, this could be at the end of the year that from the expected profit, you might even pay out a dividend. Could you give us more information on that, please?
Yes, we can give you some information on that. I don't know if Maria wants to mention that. I will comment on that briefly. I think it's important to take a look at the gap between dividend and guarantee.
Yeah. Absolutely. Thank you for the question. And of course, we were very clear from the onset of getting the Bund backing for our guarantee facility that we wanted to exit it as soon as possible.
Of course, things had to happen in order for us to progress to where we are today. For example, the rating, our credit rating outlook change from negative to stable in December was one lever, for example. So what I can clearly say to you is we are preparing the replacement of the Bund facility, of the backing of the Bund guarantee facility, and we are committed to exiting that, as always said, as soon as possible. But we would like to do that by the end of this fiscal year.
So again, that's in progress right now, and this has always been our intention, and it is part of our broader strategy to continue to strengthen our balance sheet and our financial position and again, get some of that flexibility that you're referring to, to look at when and if we can provide a dividend in the future. As you know, it is restricted under the Bund restrictions for this fiscal year.
Just to make sure that this has been correctly understood. To actually dissolve this, we would have to look at 2027 and take the dividends for 2026 for this. That's the order because we would then have the profit that we would be able to use for this purpose. I just want to make sure that this is correctly understood. Thank you very much for that note.
Kathrin Witsch from the Handelsblatt also had the same question, meaning that this question has been answered. So it's up to the end of the fiscal year. We will be doing our best to achieve this, and we will inform you as to how it progresses. The next question is from Max Plechinger from EnergyWatch in Denmark. Hi, Max.
Hi.
Ask your question.
Yeah, I have two questions on Siemens Gamesa, one on offshore and one on onshore. Now, I can't see the ASP for wind turbines in the report, but can you say anything? Have the costs of offshore wind turbines gone up substantially in the last nine months? And I'm asking, of course, because one of the offshore developers yesterday canceled a large project citing price increases as a key reason. So the real question is, of course, how worried are you on offshore wind in the near term, not only in the U.S., but also in Europe as tenders are failing to attract bids and as approved contracts are canceled after short periods of time? And on onshore, you mentioned an order for direct drive onshore turbines, but now the 4.X machine has been back on the shelf for now eight, nine months.
Can you say anything about how many 4.X orders have you had yet? And in hindsight, was it worth it to relaunch the machine? Thank you.
Yeah, more on Max.
Yes. Good morning, Max. Should I speak German or English?
Okay. Come Danish.
Or English.
Or Danish, perhaps. As regards the offshore discussion, first of all, looking at price. The price situation on the offshore market is stable. Placing this into context, as we discussed it yesterday, it's particularly those costs that are grouped in offshore projects. Of course, there's inflation, which also plays a role, but in terms of the ASP, the last quarter for offshore was quite stable. So how do I see the offshore market in general? Yesterday, we didn't have good news for the offshore market. Right from the beginning, we had a very conservative assessment of the offshore wind market, as it was always discussed in public, meaning that this does not have a short-term impact on us, but certainly for 2029 to 2031, we do have to consider how this will develop.
We are confident, and we make confident decisions at Siemens Gamesa to carry out expansions in factories in the offshore area. We talked about the U.S. We talked about further offshore sites, but this was not done. I think that was the correct decision. We were conservative, and this shows us that, of course, expansion is taking place more slowly. That's what we are seeing. We don't want to move with haste, but this expansion is taking place more slowly. It is therefore important that the investors achieve the general circumstances so that these projects are actually worthwhile, and those are part of discussions that we're having with politics. For 4.X in the offshore business, we don't yet have any booked orders, meaning that we are still in project development for the 4.X. We do have a very limited number for underused capacities in plants.
That is taking longer than we expected. So it's quite an onerous question. Was it worthwhile or not? Our target, as we've always said, for offshore was to eliminate risks, and that's what we're doing. The 4.X turbines, which were put onto sale, we had to really start with this project and ensure that these projects were improved as necessary. So that's not a new development. It's part of a solution of quality questions. We would have done this anyway. What is decisive for onshore is if we then put these on the market. When we put these on the market, it will be a question of 5.X.
The next question, I'd like to let you know again that if you do ask another question, it's asterisk one.
Next question is from Markus Fasse. The first question has already been answered about state guarantees and when will these be dissolved. Maria said, as soon as possible. The second question is to you, Christian. What is the impact of the power cut in Spain on the Siemens Gamesa plants, and how do you assess the power supply security in Germany and Europe?
Well, firstly, the impact on us, it wasn't significant. We do, of course, have redundant emergency units for energy supply, so we were able to get the machines back online very quickly. So, as I said, that wasn't a significant issue, but of course, the matter in and of itself is quite particular. It does show that grid stability is not something we can take for granted.
In particular, if you consider the generation structure and the changes thereof, it was a time of day when a lot of solar energy was being fed into the grid. And there are two points worth considering. The first is the power cut and how long it actually took to get power back. I think that we are very well positioned here because we always have a connection between energy generation technology and Grid Technologies, and we have to see those two things together. We also have to consider what connections are like to other countries, how much energy can be transferred between countries to stabilize grids. What's also important is to have a certain amount of redundancy on the grid and inertia so that we can actually deal with these situations well. Maria.
The next question is from Ulf Meinke from WAZ.
Good morning. I have a couple of questions. I'd like to refer to the upswing in gas turbines. Which plants produce them in Germany? And I'm also looking at North Rhine-Westphalia. And which plants in Germany and nationally are benefiting from this upswing in gas turbines? And my second question is the hydrogen question. This is also a task which we can see for the German government, the ramp-up of the use of hydrogen here.
Well, I don't know if I understood you. The sound was very poor, but the way I understood it, it's a question of the plants, especially in Germany. And we have to say, and Maria touched on this, we have very good demand in all areas. In other words, in all plants, we have good demand.
In Germany, in the last three years, we've made major investments, about EUR 1 billion, in expanding and renovating our plants. This is also Duisburg and Mülheim that you referred to. These plants are affected by this as well. Duisburg is an industrial compressor market. That market is going very well, as you can see, in compression. We also have expansions in the south as well. Let's say Erlangen and Nuremberg. Here too, we are here in Germany to recruit more employees. Growth is being seen everywhere. We're also investing in other regions as well, of course, and in the markets where we have our projects. That's where we invest. For EUR 2 billion in CapEx this year in the expansion of plants, of course, a lot of this is in Germany. I think this is a very good message for Germany.
As far as hydrogen is concerned, we've always said that it's going to take a lot longer than people think, and last year, we had good orders, so we are producing electrolyzers, and this is a market which is delayed. It's going to take a whole lot longer. We said it will be difficult before the end of this decade to have any commercial business. Of course, this is something that the government will have to take into account. Katharina Reiche, the new minister, was head of the national hydrogen market. If anybody is able to do that, then she's the one, so we look forward to discussions with her. Thank you.
Thank you once again. Again, the chat is only open for questions from journalists, not from employees or other talking groups. There are other formats for you. So, i n the call, the English-speaking people, if you want to ask a question, please press star one on your phone.
The next question is Ms. Jill Fleming from the Börsen-Zeitung . Good morning, Ms. Fleming.
Good morning, Ms. Ferraro and Mr. Bruch. I have three questions. You talked about the effects. What about the situation here? Will there be more friction, or will there be any collapse? The second question is you mentioned you did better than you've done over the last 10 years. Is this something that is going to continue in the medium term, two to three years, or is this just a peak this year? And the third question, Siemens Energy seems to be in a position to have to publish their key figures at an early point in time. Is the expectation management or forecast management not the way it should be?
Good morning, Ms. Fleming. As far as the ports are concerned, well, I wouldn't talk about a collapse there, but if tariffs are imposed and if the structures are not clear, then, of course, you will need more people to process all of this. Not everything will be automated, and that means that getting through customs is something that's going to take longer, and all of our timelines are quite tight, and this is something that needs to be dealt with, and of course, it means more work for us as well, so today, once a ship leaves the port of origin, then we begin with the tariff administration. We can manage all of this, but this is the effect that you must not lose sight of. A lot is going to happen, and you simply will have to change some of the workflow.
This is something that is not desirable, but I would not refer to a collapse. This is a lot of effort involved. It's not just something that you have to calculate very quickly. The gas turbine trend, yes. Let me put it this way. By the end of 2026, that is our specific pipeline. This will continue, and until the end of the decade, we expect that there will be a clear logic behind all of this. The gas turbine market will be at an elevated level, and this was the reason why we decided that we would invest in capacity expansions, and this was for existing locations, mind you. Then you asked another question, premature guidance. Yeah, maybe Maria can answer that one, but one comment from me, first of all. I don't recall having growth rates that are double-digit in all of the business areas.
I don't recall ever seeing that. And I think that we have such a great boom in orders in one quarter over all of our different business areas, but then we were pretty much able to stick to the quarter. But of course, this does raise questions. If things continue to run this well, then of course, forecasts are a bit difficult. Maybe Maria can add to that.
Thank you. Hello, Fleming, and thank you for the question. Of course, we're not happy with the fact that, of course, this is volatile, if you'd like, or unpredictable. It goes back to what I said earlier. We are really facing unprecedented growth in many of the areas, and I think all at once, right? I think that's also something that we're trying to understand and get our arms around. Certainly, if you look at the past, let's say, couple of years, we're trying to also ensure that we properly assess the growth opportunities and what that means for our figures. Always, I assure you that we're always representing the best picture we have at that moment. However, of course, you try to take the puts and takes, and perhaps we err on the side of caution.
That's true, given where we've come from. But certainly, we do feel that this new outlook really does represent what we see for the fiscal year. Again, we will come back with the outlook for next year and the midterm targets. And again, as Christian mentioned, you know, in some areas, we have such a large growth. For example, large order growth essentially impacts cash, right? And that's the related cash flow that you see this year. And when we're talking about order growth, it's not just one billion or two billion. It is quite significant for the year, and hence the significance, plus the profitability, of course, the significance that you see in our cash flow outlook.
And also in our short-cycle transactional business, we're also seeing a very strong service season, as you see, for the first half year, and that also has an impact, for example, on revenue and on profit. But again, you're fully right. We can do better, and now I can assure you we'll continue to endeavor that our outlooks represent the best picture and set assumptions that we have at that time.
Okay, thank you. Thank you. As far as I'm aware, we still have one question from Wilfried Eckl-Dorna from Bloomberg. Mr. Eckl-Dorna.
Yes, good morning. I have two very brief questions. Mr. Bruch, perhaps you could give us some more detailed information regarding the compensatory measures for the tariffs. In the presentation, as you already said, there was something regarding price increases, but ultimately what we saw was alternative suppliers and how they are found. Perhaps you could let us know how far you've progressed on this. That's the first question that I have. The other question is in reference to state guarantees, but actually the question has already been asked. Just one third point. How far along, or sorry, to what extent is Siemens Gamesa impacted by the U.S. tariffs? How are the wind parks doing? Is Siemens more impacted than other areas?
Those are the questions I have. Thank you very much, Mr. Eckl-Dorna. Regarding the measures, I always distinguish between existing matters and what we're considering for projects in the future. I would note across product areas, we have local value added. We did have a purchasing boom in the U.S. last year. Approximately EUR 2.5 billion was not in the U.S. That's what we're managing and what we're considering what to do with. One measure would be, for example, to take this order volume and to transfer more to American suppliers. We need to consider whether that's worthwhile because that takes time. We are investing in the U.S. I've said that already. We are expanding plants to increase further financial benefit in the USA. Those were the right decisions to make before the Trump administration took office. Of course, they want to see value creation on the ground.
We have already set things in motion. It's not already the case across all plants, but all questions regarding price increases, that refers to products moving forward and what we are. This is always driven by comparability with our competitors because if we're comparable, then we can make changes on the price side. We're able to move forward. We do see that we are positioned very similarly, all of us. There are, of course, products here or there that might be slightly different, but ultimately across the entire portfolio, we are very similar. This means that with these measures, a high two-digit million amount is distributed relatively similarly across all product ranges. So it's not just a question of gas or steam, but all product regions. It is distributed quite equally.
Thank you very much. This brings us to the end of our conference for today.
Thank you very much for taking part and for your interest. If you do have any questions, my press team and I are available for a phone call. The telephone conference for analysts that Christian Bruch will be leading will take place at 10:30 A.M., and you can take part in this as well, but the journalists will not be able to answer any questions. You can find the link to this on our website, so the next conference for the third quarter will take place on the 6th of August in Berlin, and I'd like to wish you all a pleasant day and say goodbye from Munich.
Bye-bye. Thank you.