Good morning and a warm welcome to the Siemens Energy Q4 Fiscal Year 2025 Analyst Webcast. Today we are here in the factory in Berlin. First of all, I really have to say that we are sorry that you had to wait for five minutes. Of course, we are going to add that one, the five minutes, up on the end of the call, so that should not happen. Please excuse for that. As you probably noticed already, we pre-released our results yesterday night and published all the documents around 9:00 P.M. on our website. Now I am pleased to have with me here President and CEO of Siemens Energy, Christian Bruch, and Maria Ferraro, our CFO. In the next 30 minutes, Maria and Christian will take you through the developments of the last quarter and the fiscal year 2025. Thereafter, we will continue with our Q and A. For the entire webcast, we estimated roughly one hour. With that, I would hand over to Christian.
Yeah, thank you very much. Also, good morning, everybody, also from my side. Thank you for joining our quarter four call. We do it here from the factory in Berlin. That is something I wish you could see really continuously because we have our products around us, and this gives a good atmosphere. As we wrap up fiscal year 2025, I would like to take a moment to reflect on Siemens Energy's journey over the past five years. When we listed Siemens Energy on September 28 in 2020, we had a clear ambition: focus and deliver on fundamentals, co-create innovations with customers and partners, and start the energy transformation, all this based on our purpose, re-energize society. Since then, we have come a long way.
We are offering the right products, solutions, and services to serve our customers in a changing energy world driven by higher electricity demand and the need for energy security. The trust of our customers placed in us and the strength of our portfolio is reflected in our continuous revenue growth since our listing, in total by 40% to almost EUR 40 billion in fiscal year 2025. At the same time, our order backlog has increased by around 75%, bringing us to another record high level of EUR 138 billion at the end of fiscal year 2025. This is underlining the confidence of our customers and our ability to deliver complex, critical infrastructure energy projects, and the strong order backlog provides us good visibility for fiscal year 2026 and beyond. Our journey has not been without challenges.
We started in a world which was determined by COVID, and in fiscal year 2023, we were confronted with severe challenges at our wind business. Our focus on operational discipline and stringent execution brought us back on the successful path, and since then, the resilience of the company has been strengthened. The result of this journey is a 350 basis point profit margin improvement since our listing and a 1,500 basis point improvement since fiscal year 2023. Looking at this development, I want to thank everyone working at Siemens Energy, our team purple to make this happen. I'm proud of what the team at Siemens Energy has achieved together so far, and the journey has just started. If the past five years have been about building the foundation, then fiscal year 2025 was the start of a growth journey with continuous margin expansion.
Earlier this year, we upgraded our guidance at our half-year results to reflect our confidence in the development of our business. I am pleased to report that we have achieved the top end and partly overachieved our upgraded targets. Fiscal year 2025 has been a year with strong performance. We saw 15% revenue growth driven by robust demand across our core segments. We achieved significant margin improvement of 500 basis points year over year, thanks to operational excellence and the execution of more profitable orders, which we signed in the last couple of years. Finally, we generated an excellent level of free cash flow. While Siemens Gamesa continues its turnaround journey, the rest of our portfolio has demonstrated remarkable performance. For the fiscal year 2026, we have set ourselves ambitious targets. We also upgraded our midterm targets for fiscal year 2028 substantially.
For fiscal year 2026, we target a profit margin before special items of 9 to 11% and revenue growth between 11% and 13%. Midterm for the fiscal year 2028, we are aiming for a low teens percentage range revenue growth and a profit margin before special items of 14 to 16%, more than doubling current margin levels within three years. These targets are based on a robust order book, a culture of accountability, and operational excellence. Looking into the development of orders and revenue in the different regions in fiscal year 2025, we have seen strong market momentum and are confident that this will continue in the next years and be a strong base to achieve our midterm targets. During the last year, all our regions, Europe, the Americas, Asia-Pacific, and the Middle East, delivered consistent expansion in demand.
The underlying favorable trends are intact and continuing for the foreseeable future as the demand for electricity and the need for modernization and expansion of the electrical infrastructure should proceed to increase. Our portfolio covers to a large extent today's and future technologies to meet this demand. Next to the coal-to-gas shift, peaker demand and the generally higher electricity demand from developing societies, as well as increase of electrification, 2025 order intake has been substantially supported by the electricity needs for data centers. Especially in the U.S., this has driven unprecedented demand for gas turbines and grid infrastructure and translated into record high order volumes for Siemens Energy in fiscal year 2025. We almost doubled the number of gas turbines sold globally from 100 units in 2024 to 194 units in 2025.
Grid technology more than doubled the sales to hyperscalers to over EUR 2 billion in fiscal year 2025, driven by North America, but also across all other regions. It is for us a deliberate target to diversify the origin of our orders, ensuring that our growth is balanced and resilient. Based on the current growth momentum, we are adapting our footprint and aligning our operations to regional demand and customer needs. The increasing regional setup helps us to mitigate the continuous geopolitical challenges like tariffs, which we, for example, experienced in the second half of fiscal year 2025. Let me give you some additional highlights on new projects from the last quarter. In our gas service business, we sold in the quarter 5 gigawatts of gas turbines and signed 11 gigawatts in reservation agreements. This was mainly driven by Saudi Arabia and the U.S.
With that, the total commitments increased to 54 gigawatts in fiscal year 2025, thereof 26 gigawatts orders and 28 gigawatts reservations. 12 gigawatts are related to data center. Pricing momentum for gas services continued to be favorable and is expected to continue that way in the foreseeable future. Grid technologies achieved the strongest quarterly order intake in fiscal year 2025, driven by substantial demand growth across all regions and the highest quarterly revenue in history driven by both product and solution business. We are confident that the profitable growth we aspire for fiscal year 2026 and beyond is supported by a strong electricity market. Fiscal year 2025 was marked by several milestones that provide a foundation for future success and shareholder returns.
Due to our solid financial performance throughout the year, we were able to exit the bond guarantees, improve our credit ratings, and lift the dividend ban for fiscal year 2025. Our net cash position and robust liquidity profile allows us to pursue strategic growth and shareholder returns without compromising financial discipline. We have put the right measures in place to continuously drive profitability. This includes optimizing our cost structures, reducing non-conformance costs, and being selective with the projects we take on, ensuring they align with our target margins and long-term strategy. Our portfolio optimization efforts are well underway, but we will continue to review our portfolio elements. The divestment of our Indian wind business, which we have agreed in 2025 with a group of investors led by TPG, is an important step to focus our onshore wind power on selected regions.
Throughout the whole year, we were investing in the growth of our core business and a further strengthening of the supply chain. Examples were the acquisition of RWG and CIC this year, which will help our gas service businesses to deliver on their commitments. We have been investing in the expansion of our factories. Strong focus is here by the expansion of existing sites to achieve effective use of the capital spent and short payback times. I'm pleased that also the development of partnerships to enhance our offerings into the markets made good progress in fiscal year 2025. Here's to mention Rolls-Royce in the area of small modular reactors and Eaton in the field of data centers. You will see a lot more details on our future journey during the Capital Market Day in Charlotte, and we are excited to discuss these measures together with you.
We are positioning Siemens Energy to lead in the field of resilient energy, pursue profitable growth, and deliver sustainable shareholder returns. With that, let me hand over to Maria for the numbers. Maria.
Thank you very much, Christian. Hello, everyone. From my side, a very good morning and also a very warm welcome. I'm pleased to share with you our Q4 and full-year financial results. As always, I'm happy to answer any questions you may have afterwards. Before I go into the performance of the specific business areas, I would like to start with an overview for Q4 and full-year 2025 at the Siemens Energy Group level. Overall, we had a very strong finish to the financial year. Quarterly revenue exceeded the EUR 10 billion mark for the first time with strong quarterly figures recorded for orders, profit, and cash flow. Fiscal year 2025 is a record year, and we reached the top end of our guidance for all KPIs. Now, looking at Q4, orders reached EUR 14.2 billion, and we saw a continuing strong demand specifically in GS and GT.
For the full fiscal year, we ended up just shy of EUR 60 billion in orders. This marks a record high since the listing. On a geographic basis, growth was broad-based, all regions reporting recorded increases. For fiscal year 2025, orders were driven by a significant increase of 21% in our new unit business. Here, we saw exceptional growth in gas services with a remarkable 94%. Our service business grew by 16% compared to fiscal year 2024. The book-to-bill ratio in fiscal year 2025 was at 1.51 for the group, and the order book climbed once again to a new record high of EUR 138 billion. Revenue in Q4 reached an all-time high since the listing, like I mentioned, of EUR 10.4 billion. This is a 9.7% increase on a comparable basis.
The improvement of this quarter was primarily driven by GT and TI, with both growing by more than 19% on a comparable basis. For the full year, we ended up just shy of EUR 40 billion in revenue, which also marks a record high since the listing. Full-year revenue grew significantly in both new unit at 18% and in service with 13%, both on a comparable basis. In Q4, profit before special items was EUR 471 million. This is significantly above the negative EUR 83 million in prior year's quarter, ending the fiscal year almost at EUR 2.4 billion. Again, this is another record for Siemens Energy since the listing. Here, our profit increase was mainly due to increased volume and related productivity effects, but was also driven by improved margin quality of the processed order backlog. Profit was negatively impacted by tariffs in the quarter, with a high double-digit million euro amount.
As already indicated in Q3, this was mainly due to the changes in the custom regulations between Europe and the U.S. Additionally, in Q4, the amendment of Section 232 came into effect, which impacted mainly Siemens Gamesa. In special items, we see adjustments mainly in Siemens Gamesa related to the sale of the Indian wind business, as expected, as well as the continued restructuring efforts. Net income for Q4 was EUR 236 million. Free cash flow pre-tax was more than EUR 1.3 billion for the quarter and therefore significantly above last year's quarter level, mainly driven by the sharp increase at gas services. I will talk a little more in detail about the drivers of our free cash flow on slide 11. Now, let me turn to our order backlog on the next slide. Looking at our backlog, as we mentioned, we ended the year at EUR 138 billion.
For fiscal year 2026, this coming year, the revenue coverage is already more than 85%. In fiscal year 2027, we see this as approximately 60%. We also see an improved order backlog margin development in fiscal year 2025. I will stop there because I will provide further details on the backlog margin development by BA at our Capital Market Day next week. Please stay tuned. Now, let me talk in more detail about the drivers of free cash flow. Free cash flow pre-tax, as I mentioned, was EUR 1.3 billion for the quarter, roughly EUR 400 million more than Q4 of the prior year, again, mainly due to improved profitability impacting our net income. Positive cash contributions from our net working capital are mainly driven by an increase in contract liabilities and a decrease in inventories. Additionally, we continue to have incoming reservation fees.
This is also adding to our cash flow generation. Very quickly, an update on Siemens Gamesa's quality cash outs. For Q4, this amounted to EUR 157 million. For the entire year, it was approximately EUR 450 million. This is in line with our mid-triple-digit million euro amount that we indicated for this fiscal year. We expect a similar amount for fiscal year 2026. Looking at CapEx, we spent EUR 685 million in Q4, or roughly EUR 1.7 billion for fiscal year 2025. This is to fuel our future growth mainly for expansion and capacity extensions. For example, the ramp-up in Siemens Gamesa offshore, as well as investments for capacity expansions in gas services and grid technology. The amount spent in this fiscal year was lower than anticipated at the beginning of the year, just due to timing and reallocations.
Therefore, please stay tuned also in terms of how we see the target of CapEx for fiscal year 2026. We'll look at that a little more in depth, of course, at our Capital Market Day next week. Now, looking at net cash on the right-hand side of the slide, overall, we have EUR 9.2 billion in cash and cash equivalents. Our financial debt stood at EUR 4 billion, of which EUR 2.4 billion is long-term. This is an increase of approximately EUR 0.3 billion versus Q3, mainly due to increased leasing obligations. Taking into account pension provisions of EUR 406 million, this brings us to an adjusted net cash position of EUR 4.8 billion at the end of September, compared to just EUR 2 billion a year ago. Overall, we continue to have to build a strong balance sheet commensurate with an investment-grade credit rating profile.
Now, this is a perfect segue to a question we receive very often from investors over the last few months regarding capital allocation. For this as well, we will provide more details at our Capital Market Day next week. However, one message which we can already reveal today is the dividend proposal for fiscal year 2025, demonstrating our commitment to shareholder return. We will propose a dividend of EUR 0.70 per share for fiscal year 2025, subject to approval at our annual general meeting in February 2026. Now, let's have a quick look at the financial performance of our four business areas, starting with our Gas Services business. In GS, we had a very strong finish to an exceptional fiscal year 2025. Congratulations to the entire gas services team.
The Q4 orders of EUR 4.8 billion were up by roughly 38% from prior year quarter, again driven by strong demand in the U.S. and Saudi Arabia, as well as significant growth in service business, which was up roughly 48%, ending fiscal year 2025 with a record order intake of EUR 23 billion. Book-to-bill was an impressive 1.89 for the fiscal year. This led to a record order backlog of EUR 54 billion, another all-time high for our GS business. In Q4, Gas Services booked a total of 19 gas turbines for power generation and oil and gas. Eleven of those were large gas turbines. Our gas turbine, greater than 10 megawatt market share for power generation, stood at 14%. And for large gas turbines, greater than 100 megawatts, at 19%. Q4 was always expected to be a bit lower compared to the previous quarters, solely due to timing.
For fiscal year 2025, overall, Siemens Energy achieved number one position in gas turbines greater than 10 megawatt for power generation with 31% market share. In large gas turbines greater than 100 megawatts, we have secured number two position with a 26% market share. Again, a fantastic performance, and we are really grateful for the confidence our customers have placed in us and for our team's ability to secure those orders. Q4 revenue was EUR 3.1 billion, a 15.5% increase on a comparable basis. This ends fiscal year 2025 with a record revenue of more than EUR 12 billion and a comparable growth of 14.2%. This is above the fiscal year 2025 guidance range of 11% to 13%. In Q4, new unit business showed significant growth of almost 34% comparable and service business of roughly 15% comparable. Q4 profit before special items was EUR 251 million. This was a margin of 8.1%.
This is 300 basis points versus prior year Q4, again showing some of the normal seasonality pattern, but also reflecting the improved margin quality for the processed order backlog and new units business. This ends fiscal year 2025 with a record profitability of almost EUR 1.6 billion and 13% at the top end of the 11% to 13% fiscal year guidance range. Lastly, but certainly not least, free cash flow for the fiscal year came in at a very strong EUR 3.2 billion for Gas Services. This is a cash conversion rate of just over 2. Again, fantastic job, GS. Now, let's take a look at our Grid Technologies Business. This was also a record year for Grid Technologies. Q4 orders of EUR 6.9 billion, up 31% year over year.
This was driven by strong growth across all regions, but specifically in the U.S., and an exceptionally high demand for product business. This ends fiscal year 2025 with a record order intake of more than EUR 21 billion. Book-to-bill ratio for fiscal year 2025 was at 1.9, again resulting in another record order backlog of EUR 42 billion. Quarter four revenue reached a new quarterly high and grew by 19% on a comparable basis to EUR 3.1 billion. This is ending fiscal year 2025 with a record revenue of more than EUR 11 billion for GT and a comparable growth of 25.4% for fiscal year 2025, which is within the upper end of the guidance range of 24% to 26%. Revenue increase was supported by the steady processing of the order backlog, with the short-cycle business exceeding the solutions business. Q4 profit before special items was EUR 463 million. This was a margin of 14.7%.
This is also plus 450 basis points versus prior year quarter four, ending fiscal year 2025 with a record profitability of almost EUR 1.8 billion and 15.8%. Again, at the upper end of the 14% to 16% guidance range for fiscal year 2025. Free cash flow for the fiscal year for GT came in at EUR 2.8 billion and a cash conversion rate of just over 1.55. Excellent job. Thank you so much. Again, well done to our GT team. On the next slide, we take a closer look at our Transformation of Industry Business Area. Fiscal year 2025 was a record year for TI with regards to revenue and profitability. Q4 orders were EUR 1.6 billion. This was the highest quarterly order intake for the fiscal year. However, a decrease of approximately 20% versus prior year on a comparable basis.
This was due to an exceptionally large order in prior year orders in compression and in sustainable energy systems. The full year came in with EUR 6 billion. The book-to-bill ratio for 2025 was just over 1 at 1.01, and the order backlog at the end of the quarter amounted to EUR 8 billion. For TI, Q4 revenue grew by just shy of 20% to EUR 1.6 billion, mainly due to substantial growth in the compression business. This is ending fiscal year 2025 with a record revenue of EUR 5.7 billion and a comparable growth of 13.5%. Q4 profit before special items was EUR 177 million, almost double compared to Q4 of last year, resulting in a margin of 11%.
This is a plus 420 basis points versus prior year Q4, ending fiscal year 2025 again with a record profitability of almost EUR 646 million and 11.3% above the 9% to 11% fiscal year 2025 guidance range. Here, the biggest contribution to the improvement in Q4 came from industrial steam turbines and generators with plus 420 basis points and compression with plus 300 basis points compared to previous year's Q4. Again, huge congratulations to the TI team. They have really been on a successful turnaround path for the last couple of years. On that, when the TI business area was established, we emphasized the turnaround nature of most of its businesses and, as a result, provided additional voluntary disclosure for the independently managed businesses, or IMBs. Given the successful turnaround of key businesses such as compression and steam turbine generators, this additional disclosure no longer will be provided.
Accordingly, beginning with fiscal year 2026, reporting for TI will be standardized in line with the group's approach and the other business areas, and the separate IMB disclosure will be discontinued. Therefore, as of now, for Q1 of fiscal year 2026, TI will be reported in the exact same manner as all the other business areas. Moving on to the next slide, where we take a closer look at Siemens Gamesa. Here, Siemens Gamesa finished fiscal year 2025 in line with expectations despite the strongest headwinds from tariffs. Q4 orders came in at EUR 1.1 billion. This is a similar level as last year's Q4 number, if adjusted for roughly EUR 3 billion large offshore order in the North Sea in the prior year quarter. Orders overall for fiscal year 2025 are EUR 9.3 billion.
The book-to-bill ratio for 2025 came in at 0.9, and the order backlog is EUR 36 billion. Q4 revenue of EUR 2.7 billion, representing a decline of roughly 9% on a comparable level to prior year's quarter. In Q4, a significant increase in the offshore business could not offset the expected decline in the onshore business. However, overall revenue for fiscal year 2025 was EUR 10.4 billion, well above the fiscal year 2025 guidance range of 4.7%. Q4 profit before special items came in at negative EUR 303 million, significantly better than prior year's quarter level, but remained negative, ending fiscal year 2025 at around negative EUR 1.3 billion, which is exactly in line with our guidance. This quarter, we did have more underlying operational improvement, which was held back by certain negative effects, for example, tariffs imposed by the U.S., which we already indicated in our Q3 closing.
In the Q4, the direct negative impact for tariffs for Siemens Gamesa was a low to mid double-digit EUR million amount, and again, mainly driven by one-time effects related to long-term service agreements in the U.S. Now, let me move on to our outlook for fiscal year 2028 and raised fiscal year 2028 targets. First, our financial outlook for fiscal year 2026. For SE overall, we expect 11% to 13% comparable revenue growth and a profit margin before special items of 9% to 11%. This is, at the midpoint, a step up or increase of 400 basis points compared to fiscal year 2025. We also expect a net income of EUR 3 billion to EUR 4 billion and a free cash flow pre-tax of EUR 4 billion to EUR 5 billion.
Looking at the business areas, when it comes to revenue growth, all business areas will grow in fiscal year 2026, with grid technologies leading at 19% to 21%, then followed by gas services with a growth of 16% to 18%, both of them in the high teens. All business areas are demonstrating continuous year-over-year improvement and delivering double-digit profit margins, or high. The most significant step change will be the anticipated break-even of Siemens Gamesa. In addition, all other business areas are targeting a margin uplift of approximately 200 basis points compared to the fiscal year 2025 target ranges. Now, just quickly, the updated financial targets for fiscal year 2028. As indicated in Q2 of last fiscal year, when we upgraded the guidance for fiscal year 2025, we did use the time to update the midterm targets accordingly.
For Siemens Energy Group, we are aiming to achieve a compound annual growth on a comparable basis in the low teens % range through fiscal year 2028. In addition, we target a profit margin before special items in the range of 14% to 16% by fiscal year 2028. This represents a step up of approximately 400 basis points compared to previous targets. The business area targets for revenue growth and profitability have been outlined accordingly. In summary, all business areas foresee continued revenue growth. For profitability, the most significant step change by 2028 will include an uplift of approximately 600 basis points for gas services and 500 basis points for grid technologies compared to prior targets. With this, thank you very much for your attention, and I now hand back to Christian for some closing key messages. Thank you very much.
Thank you very much, Maria. Thank you. I will keep it very, very short because obviously, I look forward to see you next week on the Capital Markets Day when we have more time to discuss, and we will provide you with more details on our different businesses and the way forward of the company. Summarizing 2025, it was a successful combination of an attractive market environment, products from our side, which are really needed by the market, and resilient business models, which now provide a very solid foundation for the future. We at Siemens Energy are excited to improve our company further and have kicked off with a new fiscal year, our program, Elevate Performance, which we will talk more about during our Capital Markets Day.
Our increased midterm guidance for 2028 underlines the performance commitment of the whole organization, driving disciplined execution, innovation, and a relentless focus on customer and shareholder value. For now, let me hand it over to Tobias again for the question-and-answer session. Thank you.
Thank you so much, Christian. Thank you so much, Maria. Now we will start our Q and A session. If you want to ask a question, please press star one on your telephone keypad. Again, star one. If you want to take down your question, please press Star 2. I already see that we have quite a lot of people already in the line, so I will always call up the next three names so that you're already prepared for your question. The first question will go to Sebastian Growe, afterwards it's Ajay Patel and then Max Yates. Sebastian, please go ahead.
Yeah, hi, good morning. Thanks, Tobias. Hi, Maria. Hi, Christian. The focus question would be around free cash flow, and the pre-tax target here is EUR 4 billion to EUR 5 billion, which is implying a parallel 100% conversion from the adjusted EBITDA. Could you please help us with the key parameters going into this, such as CapEx, especially in the wake of that you spent EUR 4.3 billion less than earlier guided last year, also the budgeted cash out at Siemens Gamesa? Could you also comment on what the cash impact from slot reservations has been in 2025 and how you view the conversion of the now 28 gigawatts in reservation agreements in the year 2026?
Hello, Sebastian, and thank you very much for your questions regarding cash flow. Of course, looking at the guidance to EUR 4 billion to EUR 5 billion. As you rightly mentioned, we do expect a CCR of 1 in fiscal year 2026. Of course, we do continue to see a positive impact from payments with respect to our order growth for the year and our continued backlog growth. Again, looking at CapEx, we will provide more details on that next week at the Capital Market Day, but consider that the CapEx continues to exceed depreciation. Of course, we also have some shifts back and forth between the two fiscal years. As mentioned earlier, with respect to Siemens Gamesa cash outs, there was around EUR 450 million of cash outs relating to the provisions booked before for the quality topics, and we expect a similar amount for next year. Those are the other aspects that went into the EUR 4 billion to EUR 5 billion cash flow guidance.
Great. Thank you so much.
The next person would be Ajay Patel. Could you please limit your questions always to one because we have so many people on the line? Thank you so much.
Fantastic. Thank you for the presentation and congratulations. My focus is just on your guidance. I'm looking at the 2028 target, and I just want to compare it with 2024 to understand the margin progression and the two main drivers. I was thinking, is there any way you could roughly give us the improvement in margin from 2024 to 2028? How much is driven by productivity? How much is driven by pricing for service and technology space?
Maybe I take this, and I would do this, AJ, with a, once again, clear invite for next week. I mean, we break down for every business more next week, and we want to really understand the details behind it. Until then, I would keep it relatively generic. I would say the majority is productivity, the minority is pricing on this uplift on the margin. This obviously helps us a lot that we have a very good planning base. Volumes are high, so it allows us a good leverage in productivity. That also going forward, obviously, yes. I mean, backlog margin has continuously improved, and this is what Maria are going to walk through next week. I would suggest let's take it really up next week when we in detail explain it step after step.
That was for both divisions, right? Gas Service and Grid Technologies, that comment.
That was with what?
Yes.
That was for both divisions, right?
Yes, correct.
Yes, yes.
It covers.
Yes.
Thank you very much. That's very helpful.
Actually, AJ, you'll see those details for all of the business areas next week, which show the backlog improvements.
I will be there.
Looking forward.
Very good.
The next question goes to Max Yates, please.
Thank you. Good morning. I wanted to ask about the Gas Services margin guide for 2028, 18 to 20%. I think that's probably the one that has surprised maybe me and the market the most this morning. I guess I just wanted to understand what is it that has given you the confidence to really put that up sort of as aggressively as you have? Is this mostly around the gross margin expansion on new equipment? Are you also now sort of becoming more optimistic on some of the pricing in services? Maybe just sort of finally within that, I know you won't give us the kind of target by equipment and aftermarket, but is it right to think sort of qualitatively that the margins of those two businesses are broadly converging within that target? That's my question.
Thanks very much, Max. Also there, I mean, you will see a great presentation on Gas Services next week with a lot of the details, but let me put a couple of comments in there. First of all, what we absolutely do see, and this is different to years ago, we see the gas order intake gas business level substantially higher than before. This gives us a long-term planning base, and that has been a substantial uplift, which also helps us to drive the margin because that is also about absorption of the factory, more productivity measures, better supply chain management. There are a lot of elements into that. On your comment with regard to service and new unit, be a bit careful because actually the proportion of the new unit business is going to be, let's say, growing faster and bigger than the service business.
Some of the service business, which is going to be related to the new unit business, is only going to kick off in 2028 and thereafter. That is something you have to see. There is still a decent difference in the margins on the different businesses, but what we are really benefiting from now also going forward is, keep in mind, when we started a couple of years ago, we were just introducing the large units, the HL. We have a lot of learnings also through that. That is where we get better and better really every year. We see that. We know what we need to do. These are things which are now obviously behind us. Karim will be there next week also and walk you in detail through the different matters, but that has been mainly it.
Yes, the pricing in gas is still very favorable, but I would not underestimate really this productivity element which we see really in the business area.
Okay, very helpful. Thank you.
Thank you so much. The next three questions go to Gael de-Bray, Vivek Midha, and Alexander Jones. Please, Gael, go ahead.
Yes, good morning. If I have to stick to one question, let me ask about the 2026 outlook. When I look at the margin guidance for the divisions and put them together, the weighted average implies a margin that is clearly higher than the 9% to 11% range you're guiding for at the group level. Is this because the break-even for Gamesa is not a real break-even, but rather starts with a minus, or is there anything else to consider?
I'll take that.
Yeah.
Hello, Gael, and thank you for the question. Let me just be clear. It does not indicate, and you're right in your calculations, but that does not indicate any lack of confidence in the BA ranges, not at all. It is correct that if you do the math, of course, there's some, let's say, conservatism in relation to the BA ranges. We want to deliver what we promise, and we try to ensure that we have certain estimates for that because no doubt the environment in which we operate continues to be dynamic. Headwinds are present in various areas. For example, last year, in fiscal year 2025, we experienced the tariffs. That's very much under control. We have that embedded in our guidance for next year.
Of course, we always are ensuring that there is some, if headwinds are present, that we are able to handle that. I know it maybe sounds silly, but there's also an element of rounding, of course, within all of it, trying to be as precise as possible as we can be with the BA ranges. Still, I do want to ensure you that there is no lack of confidence on the BA ranges in this regard, not at all, Gael.
Thanks so much, Maria.
For Gamesa, what is the sequential path to break-even that we have to consider for 2026?
Do you want to take that? The sequential path for...
Yeah.
I'm happy to take it, and please jump in, Christian, if you'd like. I mean, look, you see in fiscal year 2025, we've done a number of things right in the Siemens Gamesa business. They've been able to ensure that they're starting to look at how does the productivity look in all of their facilities that they're ramping up. We have an example here in Germany where one of the facilities, the productivity has increased year over year by 30%. As a result, you see that also in their ability to exceed their revenue forecast for this year. They continue to very clearly look at optimizing footprint, ensuring that in terms of cost efficiency, supply chain, et cetera, all of those levers they're bringing into this fiscal year. Please don't expect a linear progression to break-even.
We do expect that the first half or the first quarter for sure continues to be negative. Q2 and Q3 really then brings us to a positive Q4 for Siemens Gamesa in fiscal year 2026.
Thanks so much, Gael.
Thank you very much.
The next question goes to Vivek Midha from Citi.
Thank you very much, everyone, and good morning. I just have a follow-up around the reservation activity. It looks like you had a really good quarter, 11 gigawatts of new reservations in the quarter. You called out Saudi Arabia and the U.S., but it would be great if you might be able to expand on the makeup of the incremental new regions, perhaps by region, on frame types and so on. Thank you very much.
I would want to get hit a lot next week where we try to give you the breakdowns, but let me say a couple of comments to what you said. Obviously, yes, U.S. has been generally a strong market for us in 2025. What I would like to highlight is really our success across all different frames at Siemens Energy. The good thing is, obviously, we have small gas turbines, mid-size gas turbines, and large gas turbines. What you have seen is that all of the frames are in good demand and really also have helped us sometimes to accommodate timing needs of customers. In terms of markets, also, as I said in the last quarters, we tried to keep the balance. Yes, obviously, U.S. with 31% market share in the market in the order intake was a good one, but Middle East, it's not only Saudi.
You see UAE obviously also now getting very active. You see orders we get in other parts of either North Africa or places like Iraq where we were successful. This is really across the board, but I would really ask for your patience. Join us next week. Much better, Karim is the right person to dive deep into that, and you will see a lot of great information.
Thank you very much.
Thanks so much. Next question goes to Alexander Jones from Bank of America .
Great, thank you. Good morning. Christian, I think earlier today you made a comment that there are fewer synergies between onshore and offshore within Gamesa than perhaps is expected from the outside. Could you expand a little bit on those comments and whether that signals an openness to exit onshore once you've reduced costs and fixed the current issues? If that's not something you've already decided, what are the key criteria you're looking at for making that decision over the coming years? Thank you.
No, thanks for the question. I, let's say, don't overrate it, but what I want to flag up so often is that from my perspective, each of the businesses has to prove their existence. This might be in a different time frame because they're developing time-wise differently, but I look similar to other parts of the business. I look on it really business unit by business unit. One level deeper or two levels deeper to say, this has to be a good one. Yes, there are some synergies on the administration cost. There are less synergies on the market side because offshore, by and large, is two handful of countries. Onshore is a little bit more diverse in the countries.
Obviously, on the factories, most of our factories are either producing offshore or either producing onshore, and we have not seen that as a main lever. In both areas, obviously, we tap into wind turbine technology knowledge. That is something. What I would not do is to say, let's say, you definitely can only run it together, but our target is to make both businesses successful and/or look on it like this. In that regard, that was the logic behind the statement because we do not have the one factory where we do all products from, and just that this is understood.
Thanks so much. The next three questions go to Akash Gupta from JPMorgan, Ben Uglow from Oxcap, and Sean McLoughlin from HSBC. Akash, please go ahead.
Yes, hi. Thanks, Toby. Good morning, Christian and Maria. I have one on Siemens Gamesa, and maybe if you can provide a bit more color on this almost EUR 1.36 billion loss in last fiscal year between onshore, offshore, and service. When we look at the break-even, can you also help us? What are you assuming for each of the three businesses? Thank you.
Do you want to take a shot?
You can start. Yeah.
I start maybe. Okay, so one thing to always look at, I think I said it in one of the calls before, keep in mind, if you talk about the EUR 1.3 billion, there are some one-offs in 2025, which I do not expect to reoccur in 2026. The jump-off point is slightly different. In terms of the breakdown of the businesses, maybe Maria, you take this.
This is what we've always said, Akash, is on our way to the break-even that we have to have, of course, the onshore has changed in terms of the dynamic, of course, because with the sales stop, et cetera. The offshore revenues, as I mentioned earlier, are now starting to come into the revenue stream. We continue to have a strong service business. The one-offs that Christian is mentioning are actually related to the service business in fiscal year 2025, and that's really the components, if you'd like, that will make sure, on top of other levers, of course, to get us to our break-even for fiscal year 2026.
If I would.
Is it possible to quantify roughly these one-offs so we know the idea of the underlying profit? Thank you.
No, those one-offs, of course, are generally project-related in nature. In terms of the split, I can say that two-thirds is onshore and service and one-third is offshore.
Thank you.
Thanks, Akash. The next question goes to Ben Uglow from Oxcap.
Morning, Christian, Maria, and Toby. Thanks for taking the question. I was interested in the kind of market share commentary, and in particular, if we look at the 194 units, there is this mixed shift going on in your business from the large gas turbines to the industrial, the SGT-750 and 800s, et cetera. When we look across the whole market, if I think about Caterpillar, et cetera, we can see that. I guess my question is, the assumption is that this is all to do with timing and availability of the engines. My question is, is this shift just a temporary thing, or do you actually think it could be a bit more structural? The reason why I ask this is there are some aspects of the, let's call it, smaller machines that are more relevant or more appropriate to data centers. I just want to know your general sense on that.
Yeah, no, happy to take this, Ben. First of all, the big increase also on the MGT side, so the mid-size gas turbine side, is not only data centers. There is a good amount in data centers also because of shorter delivery times and sometimes of the flexibility to have multiple trains and providing actually also with a build-out of the data centers, a better ramp-up curve. There has been, for example, a very decent amount going to floating power, so gas turbines on a ship, right? There has been quite a decent amount going also on the industrial side afterwards to on the compression side. I do not want to create the picture that it is just because of AI. That is not the case for the mid-size gas turbine.
This is also, and we show it also next week, why we decided to increase the capacity on our Swedish facility, and Karim will share this next week in more detail. The good thing is, honestly, today I cannot tell you if you would say long-term picture after 2030 or whatever. I do not know. What we are doing at the moment is we are doing investments into capacity expansion with a very short payback time. This is what drives us. What I am very sure is that the investments we are doing at the moment in the sites to expand capacity will pay off. That is what I am confident about.
Structurally, after 2030, to be seen, there is a lot of logic to have a multi-train solution with a robust turbine, what the mid-size gas turbine is, but they will not be able to replace whatever an HL unit afterwards. I think this is what we're not going to see.
That's great. Super interesting. Thank you very much.
Thanks, Ben.
Thank Ben.
The next question goes to Sean McLoughlin from HSBC.
Thank you and good morning. Just latching back onto the comments around productivity, I'm just wondering specifically on capacity. I mean, how much of the real increase on the top line for Gas Services, Grid Technologies is faster than anticipated capacity ramp? I mean, you've highlighted challenges of ramping and tightness with supply chain previously. Has anything materially changed in your ability to scale faster than you expected versus a year ago? Thank you.
I would put it the other way around. The concerns have not materialized. If you see the output of the factories, it was not a given for me in 2025, particularly also with the ramp-up we had on the grid technology side, that we are able to get the volume out, which we finally got out. I think good job done. We had decent concerns with the ramp-up. We are, I think, also better compared to five years ago in terms of really standardization of workflows and ways to produce this. The same, obviously, applies to the gas turbine. I think the gas turbine is now, let's say, going through this curve, and we see it obviously also on the blades and vanes production, which we have in Florida. The uplift is now happening.
By and large, I would say the main point for me compared to before, the teething pain concerns have not realized in the sense of what we were fearing before. In that regard, it was a good job.
Thank you. If I could maybe just follow up on Gamesa as well. I recall that the offshore ramp issues, if you like, were part of the big profit warning a couple of years ago. You're still talking about ramp for 2026. I mean, what about risks or, let's say, lingering risk, or where are we on that standardization productivity?
On the productivity in terms of what I do see and what the team has done in 2025, they have achieved really increases in the factory productivity of around 30%, right? Depends a bit on the factory, but that was a great job, right? I see the path is working out. What you have to keep in mind, we switched certain models, also switched certain blade lengths in 2025. This means you have to replace the tools, you have to start new, you have to, let's say, rework the factory shop floor, and this costs productivity. Now it is really of doing the same thing over and over again. All what I have seen now in 2025 gives me the confidence that this journey continues in 2026.
Thank you.
Thank you so much, Sean.
T`he next three questions go to Lutz Zergewski from Barclays, Lukas Ferrani from Jefferies, and William Mackie from Kepler Cheuvreux. Lutz, please go ahead.
Yes, thanks very much. Good morning. Very solid 15% growth in service business in gas services last year. Would you be able to give us some idea of the split of this service growth between long-term agreements and transactional business in 2025?
No. No, I really struggled also from the top of my head that I give you the right answer. I would really say next week, I think in terms of breaking it down, happy to discuss it, but I think I would otherwise give you no wrong numbers from the top of my head.
No worries. Evelyn, I can quickly follow up on the gas turbine pricing through the course of last year. Have we been sequentially improving through the year? Have we plateaued at certain points?
Yes, slightly, right? But I would also, you know, we will never be a quarter-over-quarter business. In that regard, I do look really on the sum of 25. What I would say is the pricing trend in gas end of fiscal year 2025 still is intact and good.
Correct. Wonderful. Thanks.
Thanks so much. Next question goes to Lukas Ferrani.
Thank you. I just wanted to follow up on the gas business and the duration of the cycle. Can you talk a bit more about kind of the confidence kind of post-2028 that it is not, let's say, the best we see and there is more to go? Specifically, there is a lot of discussion on maybe the upside there is at the moment from hyperscalers and data centers and whether that would normalize, what would that happen to the overall market post that date? Thank you.
No, thank you for the question. I think our revised mid-term guidance underlines that we very clearly say gas is here to stay. That is a stronger message than we gave five years ago or three years ago. In that regard, if you look towards 2028, we are confident that this continues. We also believe we see the demand towards the end of the decade. Anything thereafter, I think it is really difficult to project and to say. What I would say is what we are now trying to do, and also with the build-up of the capacity, we are trying to increase our fleet in the market. Whenever it turns, we sit on a super strong service business. That is the logic of Gas Services. For the time being, for the next years to come, yes, we are confident that this trend remains. Let's see after 2028 what else is coming.
Thank you so much. Will Mackie from Kepler Cheuvreux, it's your turn, please.
Good morning, Christian, Maria. My question goes back to the guidance setting process and the future shape from 2026 out to 2028. Maybe given we're talking high level today and detail next week, you can just flesh out how the process was built top down, bottom up, how the shape of the guidance should unfold. Is it linear or is it very back end weighted that you deliver on the growth and the profit projections? To what extent are the elements of ramp-up costs and learning effects as you build through the GS and GT businesses weighing on the 2026 but releasing in terms of the performance into 2027, 2028?
Do you want to?
I can absolutely.
You're right. You take the first shot.
I'm going to take the first shot. How was the guidance composed or how did we put it together? I think, generally speaking, it's part of our overall planning process. As Christian mentioned, in certain aspects, we did not see or foresee such a momentum continuing for as long as we see it, even as of our last planning cycle and last year. How it was put together was very methodically, looking at the momentum that we see in GS and GT, seeing the market positivity that we see there. I think you said something around linearity or non-linear or is it back end loaded? I would suggest it really is a constant, like I said earlier, constant improvement year over year in those businesses. Why is that?
That is because it's built on the backlog that we have, of course, in-house of EUR 138 billion, which gives us the visibility. Again, do not forget, 90%, almost 85% plus of our revenue is already in-house for this year, and additional 60% is in-house for next year. Really, that gives us a very strong basis for planning in terms of the figures. From a market perspective, and this is, I am sure Christian will want to add, we have coupled that and said, okay, how does that factor into growth, et cetera? I mean, as you rightly or we have talked about, we have capacity coming on board, but again, it is all built on the back of our backlog plus our market expectations.
Yeah, and plus a couple of programs which we run.
Of course.
We also drive operational excellence in the organization. We will talk about this next week. The one non-linear element in the, if you look 26 towards, is really wind, right? I mean, there's a big step up next year.
Correct.
It is more step by step. This is what you have to keep in mind.
Fair.
The rest is really evolving the backlog and driving operational excellence.
Absolutely.
Thanks a lot, Will. As we start a bit later, we have two more questions to squeeze in. The first question would be going to Kylewinda Rajbal from Barda Favelu, and the second one to Alex Hauenstein from DZ Bank. Kylewinda, please go ahead.
Yeah, thank you, Tobias. Good morning, everyone. My question was related to gas services, and particularly the nuclear market. How do you see customer discussions shaping up so far? If you could expand on the partnership with Rolls-Royce and how this positions you for the nuclear market, maybe this is a key market for you beyond fiscal year 2028. Maybe we expect some details on it in the capital markets today as well. Any thoughts here would be helpful.
Yeah, I mean, to some extent, we address it next week. I mean, always the nuclear market is for us twofold. The one thing is a service market for the large turbines, which obviously we have a good installed fleet, and that continues to be a nice service-driven business, which used to be in the mid to high triple-digit million or so, roughly depending on the year, depending who goes into, let's say, bigger maintenance cycles. Then you have the SMR pieces, as you said, with Rolls-Royce, and you have maybe seen the announcement this week. This is something for after 2030 in terms of realization, right? I mean, this is long out. This is what we are now preparing. This is an important collaboration for us because we believe as a future project in this, but this will not influence our 2026 or 2028 or whatever. That's not decisive there. That's more thereafter.
Thank you.
Thank you so much. Alex Hauenstein from DZ Bank, please conclude with your last question.
Great. Thank you, Alex Hauenstein. I have a question with regard to the German Government. Yesterday, speaking about the strategy to build new gas power plants here and to bring them online by 2031, I saw on Bloomberg that you commented a bit on the press. Sorry, but I missed on that one. Nevertheless, maybe you could elaborate a bit from your point, even a bit beyond the point you made this morning about what that means for you in terms of potential new orders, if any, to come soon, especially in light of the capacity constraints which you have already. I mean, how realistic is this 2031? I would be also interested to hear about what in terms of size and gigawatts, what you expect to get out of that, or any indication on that would be great. I would be curious to hear your thoughts about the requirements to build in green hydro readiness for these turbines.
Yeah. I mean, first of all, we are ready here, right, in terms of we are waiting for these projects, and I cannot wait really until they finally pull the trigger to do the auctions. We have, I said it before, with a certain amount of customers, we have pre-agreements where it's either you go, we go type of setups. In other customers, we have at least pre-alignments. It is an open competition with our peers, but we definitely would like to secure projects in that. How much of this chunk, and let's assume it's the 8 gig first and then the 2 gig later, I do not know yet, right? One thing I can ensure, we have planted in, it's feasible also with the 2031 if they now move ahead.
I mean, obviously, it depends on the start date, but we would be more than willing to fight for it, and we will try to secure a fair share out of these different projects. There was the last.
Hydrogen.
Hydrogen piece. Yeah. I mean, you know, we test hydrogen for all our turbines. Most of the turbines take, all of the turbines take a certain portion of hydrogen anyway. Smaller turbines, we have tested and operated on 100% hydrogen already. The development program for us is really projected towards 2030. If we stay in this time schedule, I'm okay also with the hydrogen request. We will make this happen. The turbine will be available for that.
Thank you so much. With that, we would conclude our Q and A session. Christian, do you have any last words?
See you next week, hopefully. That is my last word. Looking forward to talk to you and hopefully in person, but the ones who are then online also will be great to have a joint discussion. Thank you.
Looking forward.
Thanks a lot. With that, we're going to conclude this call. Thanks.
Bye-bye.