Good morning, ladies and gentlemen, and welcome to the Siemens Energy's Q1 fiscal year 2026 analyst call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on page 2 of the Siemens Energy presentation. The conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir.
Thank you so much, Moritz. Good morning, and a warm welcome to the Siemens Energy Q1 fiscal year 2026 results and analyst call. As always, all documents were released at 7:00 A.M. on our website. Our President and CEO, Christian Bruch, and our CFO, Maria Ferraro, are here with me. Christian and Maria will take you through the major developments during Q1 fiscal year 2026. This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed 1 hour. Christian, over to you.
Thank you very much, Tobias, and good morning, everyone, and welcome to our Quarter One analyst call. Also from my side, thank you for joining us today. I'm pleased to report that Siemens Energy had a very strong start into fiscal year 2026, capitalizing on the favorable market momentum and successful execution of the backlog. The global energy system continues to transform with increased pace, shaped by electrification and the increasing need for security of supply, and our portfolio is excellent aligned with these long-term needs. In the first quarter, we booked orders of nearly EUR 18 billion, the strongest quarter in our company's history. This demand was broad-based across regions and business areas. The market momentum remains positive for our core portfolio.
As a result, our order backlog has grown to a record of EUR 146 billion, giving us strong visibility for this fiscal year and beyond. Our very strong free cash flow performance in this quarter was supported by a significant order momentum and customer prepayments, including reservation agreements, especially in Gas Services and Grid Technologies . These businesses continue to demonstrate strength, high market demand, disciplined execution, and particularly in Gas Services , high service intensity, all of which contribute to high-quality cash generation. At Siemens Gamesa, we remain on the path toward breakeven. The underlying operational measures show impact, in particular, the improved productivity in offshore, increased service profitability, and reduction of structural cost in onshore.
Please note that profitability in quarter one also benefited from some timing effects and was therefore less negative than expected, meaning the trajectory might not be strictly linear across the different quarters of the year. I'm also pleased to announce that we have received the first order for our SG 7.0 wind turbine, that is a successor to the 5.X platform. We will supply 6 turbines for a 42 MW wind park in Germany. Given the strength of our underlying markets, clear visibility from our order backlog, and the strong start into the year, we are fully on track to achieve our fiscal year 2026 guidance. While the first half of the year is historically stronger than the second half, this performance clearly demonstrates deeper operational momentum across the company, momentum built on backlog quality, disciplined execution, and exposure to markets with long-term trends.
Demand remained strong and broad-based across all business areas and across all regions in the first quarter. Gas services delivered its strongest quarter ever in terms of order intake, booking 102 gas turbines. That means we matched more than 50% of last year's unit volume within just one quarter. The momentum was broad across all turbine frames. In total, we booked around 13 gigawatts of new gas turbine orders in quarter one. 12 gigawatts were converted from existing reservation agreements, and at the same time, we added 12 gigawatts of new reservations. This increased total commitments to a total of 80 gigawatts, even after delivering 3 gigawatts during the quarter. In the data center segment, we have commitments of 22 gigawatts, of which 15 gigawatts are reservation agreements. But I want to emphasize, our growth trajectory does not depend on data centers.
Demand is driven by broader structural trends, electrification, industrial expansion, and the increasing need for resilient energy systems, and these fundamentals remain firmly intact. While demand for gas turbines is especially strong in the U.S., data centers still represent only one-fourth of our total global commitments. Roughly 60% continues to come from traditional applications, while the rest is related to peaking, marine, or FPSO applications. Grid technologies delivered another strong quarter, driven by robust demand across both products and solutions. The U.S. contributed with several data center-related orders amounting to a high triple-digit million EUR volume. Just to remind you, last year, we booked in that space around EUR 2 billion. We also saw continued demand for grid stabilization in the U.S., reflected in large FACTS orders with a total amount of a low triple-digit million EUR value.
Globally, customers are accelerating investments in transmission capacity to integrate renewables, meet rising demand, and strengthen stability. Recent events underline the importance of energy security and resilience. The sabotage of a cable bridge in Berlin, leaving more than 45,000 households and over 2,000 businesses without power for days, and the winter storms in the U.S., where around 1,000,000 people lost electricity, both highlight how mission-critical modern grid infrastructure is. Such events raise awareness and increase demand for grid stabilization technologies like our synchronous condensers. Regionally, the Americas, but particularly the United States, showed excellent performance. Orders grew nearly 60% on a comparable basis, and revenue increased by around 25%. This means the Americas are now nearly at parity with EMEA in order intake, a remarkable milestone that reflects the rising importance for the global energy transition.
That said, EMEA also remained very strong, with almost 20% growth in both orders and revenue. Significant wins in Poland and Turkey further demonstrate customers' trust in our technology and long-term reliability. In Asia and Australia, we also recorded more than 20% order growth. Revenue moderated due to a very strong prior year comparison from large offshore wind project in Taiwan, but the underlying demand picture remains solid. Regional diversification continues to be a priority. A good example is the well-balanced Gas Services order backlog. The U.S., Middle East, and Europe account for roughly 80%, almost evenly split among the three. Quarter one orders in Gas Services were 40% from the U.S., 35% from Europe, and 15% from Middle East and China.
Across Gas Services and Grid Technologies, the pricing environment remained favorable and supported high-quality, profitable growth as it is accretive to our backlog margins. In Gas Services, favorable pricing momentum continues, with current reservation agreements being signed with higher pricing versus current orders. Let me now give you a progress update on our Elevate program, which we introduced in detail at our Capital Markets Day in November. We are fully on track with our capacity additions, and last week, we communicated more details around our U.S. investment program, which we already indicated at our Capital Markets Day. I will provide more details on this on the next slide. In Europe, our Grid Technologies expansion is also progressing strongly. We have tripled production for wind transformers in Austria, and together with our partner, Končar, opened a new transformer tank manufacturing facility in Croatia in January.
We continue to strengthen our supply chain resilience through long-term partnerships. Our investment in ASTA Energy, a company which listed publicly on January thirtieth, ensures secure access to critical copper components for our grid infrastructure portfolio. Both S&P and Moody's upgraded our credit ratings, reflecting the improved balance sheet, improved cash performance, and stronger resilience of the company. We also drive forward the implementation of our new operating model, simplifying structures, reducing overhead, and increasing accountability across the organization. As part of that transformation, we also increase AI capabilities in our workforce to work more efficiently and unlock new productivity improvements across the company. Across all three pillars, Elevate is continuously making a meaningful contribution to our performance. Progress can be seen in our margin development, cash conversion, and operational stability. Let me provide you more details on our U.S. investment program.
We currently execute investment projects for around $1 billion to expand manufacturing in the United States and expand our workforce as part of this effort. This includes also strengthening of the supply chain and establishing two training centers for qualification of workforce. Across six states, we are particularly strengthening the Grid Technologies and gas service business. In Mississippi, we are building a new high-voltage switchgear plant and expand the transformer capacity. In North Carolina, we are resuming gas turbine manufacturing, as already indicated at the CMD, and increasing large transformer capabilities while expanding also research and development. In Florida, we are boosting our blade and vane production and upgrading our innovation center, including an AI grid lab together with NVIDIA. In Alabama, we are scaling production of key generator components. In New York and Texas, we are also upgrading compression equipment facilities.
This expansion will add 1,500 new jobs on top of our 12,000 excellent employees in the US. Last year, the US accounted for 29% of our global order volume, underlining its strategic importance. We are fully committed to supporting the growth of electricity in the US market by driving local capacity exactly where the market needs it. Let me briefly focus on Grid Technologies, where we are scaling at an impressive speed. I am proud of the progress we made with our new production sites in Austria and Croatia. In Austria, Siemens Energy has opened a new wind transformer plant in Wollsdorf, following an investment of more than EUR 100 million, creating around 100 new jobs, and at the same time, tripling our wind transformer production.
The facility was completed in just 13 months and has more than 25,000 square meters of production space, enabling an annual output of up to 2,000 offshore wind transformers for customers in 70 countries. Combined with our long-established right side, Siemens Energy now supplies transformers for 80% of the world's offshore wind parks, solidifying our leadership in this critical segment of the energy transition. Moving to Croatia, the opening of our new transformer tank factory near Zagreb, our joint venture with Končar, adds more than 400 manufacturing jobs and provides capacity for approximately 160 custom large power transformer tanks per year, strengthening our global supply chain. This is part of a broader EUR 260 million expansion program aimed at doubling regional transformer capacity to 45,000 MVA by 2031.
The new factory also bolsters Europe's manufacturing resilience by supplying heavy duty tanks for HVDC, generator step-up transformer, and autotransformers up to 550 kV, supporting the accelerated grid build-out required to integrate renewables at scale. With this, I would like to hand over to Maria.
Thank you, Christian, and good morning everyone from my side. Very pleased to be here with all of you, and let's start to go through the details of Q1 fiscal year 2026. Moving on to slide 10, looking at the group results. Orders reached a record high of EUR 17.6 billion, up 34% year-on-year on a comparable basis. Our book-to-bill ratio was 1.82, and as Christian mentioned, order backlog hit a new record of EUR 146 billion. This is up from EUR 138 billion in Q4 of fiscal year 2025. That's more than EUR 8 billion in addition. Again, giving us excellent visibility for fiscal year 2026 and beyond. Revenue was EUR 9.7 billion, up 12.8% year-over-year on a comparable basis, with all segments contributing to revenue growth.
Just as a note, foreign exchange headwinds, primarily driven by a weaker US dollar, weighed on the top line by roughly 400 basis points year-over-year. Looking at profit before special items, this was EUR 1.159 million, with a margin of 12%. This is more than double last year's 5.4%, or up by 660 basis points. Regarding FX impact in profit, just for clarification, looking at our currency movements, it does not have a material impact on our profitability. Again, this goes to what Christian was mentioning earlier. It's due to our global footprint, with strong local for local sourcing and affecting hedging strategies. Looking at net income, this rose to EUR 746 million, up EUR 494 million year-over-year.
Special items was negative EUR 152 million, mainly due to the sale of the Indian wind business. However, strong operational performance led to notable earnings improvement overall. Free cash flow reached a record EUR 2.9 billion, nearly doubling last year's result. This was driven by strong orders, reservation fee, and some timing effects. Cash flow continued to show strong seasonal patterns at the start of our fiscal year. Now let's take a closer look into our order backlog. Order backlog, as mentioned, reached a new high of EUR 146 billion. 45% of our backlog relates to service business. Again, this is recurring, profitable revenues for many years ahead. For the current year, revenue coverage stands at approximately 90% for the remainder of the year. Already for next year, fiscal year 2027, we have approximately just over 70% coverage.
The growing backlog demonstrates increasing resilience due to broad-based demand geographically, as well as across all businesses. Additionally, our order backlog margin further improved as a result of positive pricing, development, and environment. Therefore, overall, our growing backlog and healthy margin, again, provides a strong foundation for our financial performance. Now, let's talk about the drivers of free cash flow in the next slide. As mentioned, cash flow was very strong this quarter. Free cash flow pre-tax was EUR 2.9 billion, driven by strong profit development and customer advance payments, including reservation fees. This is linked to our increase in orders. Regarding CapEx, we had a slow start for cash out relating to CapEx, with EUR 347 million year to date. However, we are expecting roughly 5% of revenues or approximately EUR 2.5 billion of CapEx for this fiscal year.
Quick update on Siemens Gamesa quality anticipated cash out. This amounted to EUR 101 million for the quarter. As a reminder, for the full year, we indicated and still expect a mid-triple million amount, similar to fiscal year 2025. Therefore, we closed the quarter with EUR 11.8 billion in cash and cash equivalents and EUR 3.8 billion of debt, therein, EUR 2.4 billion long-term debt. This results to an adjusted net cash position of EUR 7.6 billion at the end of Q1. This is compared to an adjusted net cash position of EUR 4.8 billion at the end of September or last fiscal year. At our annual general meeting, which is upcoming on February 26, we will propose a dividend of EUR 0.70 per share for fiscal year 2025.
This will result in cash out of approximately EUR 600 million, anticipated in the second quarter. In addition, the announced share buyback, which was announced at the Capital Markets Day, up to EUR 6 billion until fiscal year 2028, is intended to commence in March. Just again, an update regarding our investment-grade credit ratings, which were upgraded in December 2025. Our rating by S&P was upgraded to BBB with a positive outlook, and Moody's rating was Baa1 with a stable outlook. Now let's look at the quarterly financial performance, starting with our Gas Services business on the next slide. Here we see Gas Services delivered an outstanding performance and another strong quarter in Q1 of fiscal year 2026. Orders amounted to EUR 8.8 billion.
This is up 81% year-over-year, the highest order intake ever, and again, driven by large unit, new unit projects in the U.S., Poland, Turkey, and Taiwan. Book-to-bill for Q1 was an impressive 2.83, leading to a record order backlog for GS of EUR 60 billion. Again, another, all-time high. Q1 was characterized by a very strong gas market for gas turbines greater than 10 MW, with the largest markets in the U.S. and Europe. Gas services booked a total of 102 gas turbines for power generation and oil gas in Q1 of fiscal year 2026. Therein, 19 were large gas turbines and 83 were industrial gas turbines. Our Q1 market share for gas turbines greater than 10 MW stands at 43%, securing the number one position.
Revenue for Gas Services rose by just shy of 14% at EUR 13.9 billion, compared to last year, again, driven by strong performance in new units, which saw nearly 51% comparable growth. Profit before special items was EUR 515 million, with a margin of 16.6%, up from 14.6% last year, again, reflecting improved margin quality of the processed order backlog and better underlying productivity. A gentle reminder on seasonality, our H1, our first half year profitability in GS is always stronger than the second half, just because of the service mix. Free cash flow pre-tax was EUR 1.9 billion, more than doubled, benefiting from advanced payments, as mentioned on large orders. Overall, a very strong quarter for GS, and now let's take a look at our Grid Technologies business. Grid Technologies continues its strong performance.
Orders were EUR 6 billion, up 22% year-over-year, with strong demand specifically in our product business and partly driven by data centers in the U.S., as well as large HVDC order in the U.K. Book-to-bill ratio stood at 1.95, resulting again in a record order backlog of EUR 45 billion. Revenue reached EUR 3.1 billion. This is up 26.9% year-over-year, a substantial increase, mainly driven by the solutions business, but also supported by the transformer and switchgear business. Profit before special items was EUR 538 million, with a margin of 17.6%. This is up 520 basis points year-over-year, again, driven by continued strong operational performance. Free cash flow, pre-tax was EUR 1.8 billion.
This again significantly increased by around EUR 600 million year-over-year, reflecting strong operational performance and milestone payments. Another strong quarter for our Grid Technologies team. Well done. So now let's move on to Transformation of Industry, which again delivered a solid quarter. Orders were EUR 1.6 billion, up 11% year-over-year, and this was supported by compression and electrification, automation, and digitalization projects, including a major order in the Middle East. Book-to-bill for Q1 stood at 1.21, resulting in an order backlog, a stable order backlog of EUR 8 billion. Revenue came in at EUR 1.3 billion, again stable on a comparison, comparable basis to Q1 of last year. Profit before special items was EUR 154 million or 11.8% unchanged, and free cash flow pre-tax was EUR 94 million.
This was just down due to some timing effects, looking at the previous year. So thank you to TI, and now let's move on to Siemens Gamesa. As Christian already mentioned, we are seeing progress in the turnaround at Siemens Gamesa. Here, orders were EUR 1.6 billion for the quarter. This is down from last year due to timing and a large offshore order that was booked in the prior year quarter. Revenue came in at EUR 2.4 billion. This is 3.9% up on a comparable basis, supported by offshore and service business growth. Profit before special items narrowed to EUR -46 million. This is a significant improvement from EUR -374 million just a year ago. The positive development was mainly due to productivity increases in offshore and progress in the service business.
Additionally, we benefited from prepayments or timing effects in the quarter. Free cash flow pre-tax was -EUR 545 million, and this, again, as a reminder, included the EUR 101 million quality-related cash out. So with that, I want to sum up our achievements in Q1. We had a very strong start to the fiscal year in all of our businesses across all main KPIs, order intake, revenue growth, profitability, and cash flow. So now moving to the next slide, our outlook slide. Here is our outlook for fiscal year 2026 and targets for fiscal year 2028, which remain unchanged. However, we do acknowledge that the year started with a very strong performance. At the same time, we remain mindful of the seasonality with a stronger first half than second. That typically influences our results each year, particularly within our Gas Services business.
Bookings and associated cash flow did exceed in some areas' expectations. However, it's too early to draw firm conclusions from this first quarter momentum. We will continue to monitor developments closely, and we'll provide an assessment at the half-year mark. With that, I'd like to thank you for your attention and would like to hand back to Christian. Thank you.
... Thank you very much, Maria. So Siemens Energy is positioned really excellently to deliver sustainable shareholder value in a strong market. We see really good structural demand, a record high and high-quality order book, and disciplined execution across all segments. Our long-term value creation rests on five levers: profitable growth, margin expansion, strong cash generation, a resilient balance sheet, and consistent operational excellence. And across each of these, we are making tangible progress. I am very grateful for the commitment of our people, making this company every day a bit better and supporting our customers. Well, we know that, we need to deliver, and we are fully focused on doing just that, reliable execution and consistent performance. And with this, let me hand back to Tobias for question and answers. I look forward to your questions.
Thank you so much, Christian and Maria. Well, we will start now the Q&A session for today. If you wish to ask a question, please press star one on your telephone keypad. Again, if you want to ask a question, please press star one on your telephone keypad. If you no longer want to ask a question, please press star two. I already see that there is a pretty big lineup of questions already in the queue, so therefore, I would really ask you right from the start, just to limit your questions to one question each. And the first three people going for the questions will be first, Alex Jones from Bank of America, Max Yates from Morgan Stanley, and A.J. Patel from Goldman Sachs. So, Alex, please go ahead.
Thank you, Tobias, and good morning. Maybe I can focus on gas orders. At the CMD in November, you talked about 36 GW of orders over the next 12 months, but you clearly started ahead of that run rate with 13 GW this quarter. And I think, Christian, on the press call earlier, you said you wouldn't call Q1 exceptional or one-off, given how strong market demand is. So therefore, is there upside to that 36 GW number, given the demand you see, and could momentum continue at a similar rate as Q1, in the coming quarters? Thank you.
Thanks for the question. What I said in the press call is that I continue to see strong momentum in the market. It obviously will also play out how many slots we have available and how quickly 2029 fills up. So don't... I would always say, don't multiply it by four. But at the same time, obviously, we're trying really our best to continue on this. I would still be on a 36 GW planning base for the time being. We might be higher than that. It could be, but it's really something where it depends on certain larger commitments. The specialty at the moment in the markets is also what you see is obviously multi-train, bigger orders, and this is what moves then the needle also in terms of the gigawatts.
So as Maria said, for the other comments, it's a bit too early to tell, to see how the things are moving, but I'm definitely positive on the market on GS.
Thank you.
Thanks a lot. So the next question goes to Max Yates.
Thank you. Good morning, everyone. So I guess my question was just around pricing. Could you give us a feel of how much of the order growth that you're getting year-over-year is driven by pricing? And then maybe as an extension of that, you know, we know there's pricing in kind of new equipment. Could you talk about pricing on some of the longer-term service agreements as well that you're receiving with these new orders? Are you also seeing a sizable step up in the service contracts and specifically the longer-term service agreements that you're signing with the new equipment at the moment? Thank you.
Yeah. Thanks, Max. I mean, I'm obviously we see an improvement year on year on the margins, and we also, the other statement, obviously, what we make, we see the incoming orders higher than the older orders. So we see continuous appreciation of the pricing on the gas turbine side. It is on the service side, I'm just thinking through it at the moment. As we always said, this is slightly going up as business, and keep one thing in mind, you're only going to see that after 2028. So much to put this into perspective.
Okay. Thank you.
Thanks a lot. So the next question goes to Ajay Patel.
Good morning, and thanks for the presentation today. I just wanted to ask around cash flow. Is there any reason that the shape isn't similar on cash flow this year to last year? And then, in the event that we do run ahead on cash flow, is it fair to assume the capital allocation, it works, as in a third of cash flows would be allocated towards cash returns? Just want to make sure that link is the case if we do end up better than when we expected. Thanks.
Thank you. And of course, yes, as I mentioned earlier, we did have a really excellent start to the year, and we start in a very strong position. And I think, maybe to your point of how to look at the shape of free cash flow and how that develops, it is clear that of course, the main drivers are a few, but certainly the strong order intake. And again, you know, to what Christian said earlier, the market continues to be very positive.
However, it was quite a strong quarter for orders, and not to take that and divide or multiply rather by four and say, "Here's what we can expect." And in addition, one other thing, I think one of the dynamics that perhaps is not fully, let's say, understood, is we do have reservation fee agreements. And in light of how that momentum is going, this is actually quite a sizable number. And also, in addition, I think one of, let's say, the efforts that we started from a while ago is looking at our operating working capital and how do we unlock cash. So that's something that doesn't look like linear in fashion, in some of our, let's say, difficult countries, where we've seen that we've been quite successful in receiving some of the overdue payments there.
But again, I would just state again, we had a strong, you know, year start. This is connected to volume in some areas, but we need a bit more better visibility, as the year continues, and we'll come back to you.
... Thank you. Thanks so much, AJ. So the next three questions will be going to Sebastian Growe from BNP Paribas, Richard Dawson from Berenberg, and Gael de Bray from Deutsche Bank. Sebastian, please go ahead.
Yeah, thanks, Tobias, Anna Maria, Christian. My question is, in regards to the GT segment. Apparently very strong momentum, both, in regards to orders and also execution, and not least free cash flow. So, how should we think about the order pipeline in that business? Are you in a similarly favorable position as for GS, to sell also slots to customers? And what I'm trying to better understand here is, what explains the massive free cash flow strength in the quarter in GT in particular, and how it might trend from here? And if I may just quickly follow up on one of your earlier remarks, Maria, that there's a sizable impact from those reservation fee agreements. Could you quantify those? Thank you.
Maybe you take the cash. I hope we have heard you correctly, Sebastian, because the quality was very bad. So if it was about the order pipeline momentum in GT, if I have heard you correctly, and that is obviously something which continues also to be strong. And you can bet that always every quarter, who is ahead, gas or grid? But I think in that regard, both look very strong. On also there, data centers have an impact, maybe not as distinct. It's more around the general grid, grid replacement and stabilization. But I obviously see this as strong outlook also for the year, and I think we also indicated on the Capital Markets Day that we will expect the orders to be higher than last year.
Correct. Maybe just to add to what Christian mentioned there with respect to GT, I mean, profit also has a part to play with that, and also driven by strong orders, which we anticipate and continue to anticipate in Grid Technologies. We also indicated in the GT slide that some of that was related to milestone payments. Some of those slipped into Q1 as well. Of course, we expect a very strong operational performance and underlying performance within GT. That is all reflected actually in the very, let's say, strong free cash flow. There's also an element of reservation fees for GT. I think that's also important. That plays a, let's say, a factor when, of course, delivery perhaps can be even further expedited.
So with respect to reservation fees, no, we do not disclose the amount of reservation fees. That does change, of course, in line with as Christian outlined earlier, how much, let's say, in GS, how many gigawatts are reserved, et cetera. And the reason why is that it just, it varies. It's quite variable, depending upon the contract and the size and the customer.
Thanks.
Thanks a lot. Thank you, Sebastian. Next question goes to Richard Dawson from Berenberg, please.
Hi, good morning, and thank you for taking my question. Just to follow up on these reservation agreements, have you started to see any customers maybe thinking twice about signing a reservation agreement, given thinking gas turbines, the lead time for delivery is so long? Can you make any comments on how Q2 is shaping up for those reservation agreements? Thank you.
Oh, what is shaping up? Sorry.
Q2.
Q2 is shaping up. Sorry. Well, obviously, the key thing is when can you deliver? That's the first question every customer ask, and it's obviously all about 2028, 2029. And you get, obviously, the further you reach out, 2030, 2031, and in the meantime, it goes all up to 2032. Obviously, there is a bigger hesitation than to immediately agree, because everybody wants something in 2028 or 2029. In that sense, however, I think the fundamental interest in the reservation agreement has not changed. It's more like, can you deliver certain things? And obviously, we're trying each and everything to build bridges for the customers, and I also see this in quarter two continuing on the same level.
However, we have to recognize that obviously, our delivery times continue to increase, and this is simply the fact of the matter. But, I hear in, let's say, I've been last week seeing a lot of customers myself, interest is as high as before.
That's great. Thank you.
Thanks a lot. So the next question goes to Gaël de Bray from Deutsche Bank.
Oh, good morning. Thank you very much for taking my questions. I guess I'm wondering if the flattish service revenue you had in the gas division this quarter was in line with your own expectations, and how we should think about that for the remainder of the year? I think that's probably a very short question. I have a second one on the pricing side.
I mean, you've talked a bit about that, but when I look at the backlog increasing by 10 gigawatts on a sequential basis and by EUR 6 billion in value terms, so I guess the back of the envelope calculation is that the price per gigawatt is around EUR 600 million this quarter, which is a major step up compared to what we saw last year, I think. So, maybe some comment about that? Because I think you said prices were only going up slightly. Thank you.
Maybe I take the last one, and you then comment. My feedback would be, no, I would not break it down in this, because I think it starts to get confusing by looking on the backlog and trying to apply the percentages. So I would refrain from breaking it down in more details.
Of course, and let me take the comment on our service revenue. As mentioned, overall revenue had quite a substantial FX headwind of 400 basis points, and this can be directly attributed, by the way, to our service revenue. As you know, we have a large installed fleet in the U.S., in which that could, that does play a part. If you take out the FX impact, I actually don't see it sluggish at all. It's actually for the quarter is, let's say, slightly flat. There was some one-time topics of prior year, and for the fiscal year, going in line with the pricing, we do see growth, and that's exactly what we've indicated at the Capital Markets Day. So it is FX-related, Gaël.
Okay. Thanks very much.
Thank you so much. So the next three questions go to Philip Buller from J.P. Morgan, William Mackie from Kepler Cheuvreux, and Lucas Ferhani from Jefferies. Phil, please go ahead.
Thank you. Hi, good morning, everybody. Obviously, the demand environment is very strong. I was hoping to ask about the supply situation, please. The CapEx, as you say, started a bit slowly. I think it's 3.6% of sales versus a guide for 5% for the year. Should we be reading anything into that? Are there any supply issues in ramping up the output, perhaps in GS or perhaps in GT? Any change relative to what you're expecting on the supply side? Thanks.
Thanks. First of all, on the build-out of the capacity, no, you should not read anything into that. I mean, that's more, let's say, the classical phasing. When does the planning come? When do the contractors get their contract? So that's more like that's the normal course of business. No concerns really at the moment in terms of the execution of our own capacity expansions. On the supply chain, yes, that is something which we need to watch very carefully. We had some negative impacts in quarter one on the supply chain, particular obviously on the gas turbine side. Not surprisingly, it is also on the supply chain market for the respective supplier, which is good. And we see them obviously also they're increasing prices.
We continuously work with our suppliers in terms of what can we do to expand supply chain, co-investing, and the likes. But this will be by seeing this impressive demand on the Gas Services side be continuously with us over the next two years, I would say. And you will also see it on the customer side. That's not so much us, that's really the EPC contractors, the civil and whatever that this brings up the total installed cost. But we will need to watch this very carefully. But we are on it, and this was also the reason why we decided to invest further money, why we invest further money in Florida, in our blade and vane manufacturing.
That's great. Thanks very much.
Thanks so much. So the next question will be going to Will Mackie. Please go ahead.
Yeah, good morning, everybody. Thank you for taking my question. My question will build on Phil's, really. Could you, Can we check in, or could you remind us where you stand with regard to your ability to serve the demand in 2026, 2027 in GS and GT? What I mean is, what should we be planning or thinking with regard to gigawatt install or deliveries across large and, industrial turbines and across the main elements of the product business in GT? Thank you.
Will, I have to admit, you overstretched my memory a bit. I'm trying as good as I can in terms of... I mean, the big thing in 2026, which comes online, is on the mid-sized gas turbine. That's the increase in Finspång, which is the SGT, which will, towards the end of the year, come in. The large gas turbine pieces obviously all come in 2027. And keep also in mind that the numbers we have showed on the Capital Markets Day included also a steam portion for the larger gas turbine. So, in terms of delivery for 2025, before I state no wrong number, I think we have to come back to you in terms of the exact planning. Tobias will get back to you on that one.
Thank you.
Thanks a lot. The next question would be going to Lucas Ferhani. Please go ahead.
Thank you. Good morning, and thanks for taking my question. It would be on the SGRE business, just on the timing effects you talked about on the margin. Can you give us a bit more information about, you know, what they are and maybe the number behind them? What would the underlying margin be? And also, just on the orders signed in onshore, obviously, it's a good start, but I'm wondering, you know, what do you have in budget for full year 2026 in onshore order intake? What would you think is kind of successful for the relaunch? Thank you.
Yeah, let me try. I do apologize because it was difficult to hear you, so if I hope I understood it correctly. But let me. I think the first part of that question was relating to the one-time or timing effects in the quarter one profit, and the second one was relating to the order intake for onshore. So let me start with the Q1 profit. Probably, the majority more from Q2. And again, to put that into context, it was in total, the range was likely around a mid-double-digit amount. So some examples are some of the hedging effects, so positive hedging effects. And of course, those are reversed or also evened out, of course, as we continue to execute in the quarters to come.
There was, as you would expect for a large project business like Siemens Gamesa, some project benefits and shifts. You know, it happens, right? Where customers take over projects or even earlier than expected, and that's what has happened also in Q1. And again, kind of to counter that and something that to think about when you think of quarter by quarter, there's, of course, ongoing uncertainty regarding tariffs. And we said that last year, that in the wind power business, actually, the tariff impact was the most substantial of all of ours. So of course, we're watching that very carefully. Again, our assumptions relating to tariffs for the year are fully embedded our guidance.
There's nothing to indicate at this point, but, you know, nothing was additionally booked in Q1 with wind power, but perhaps could be coming to fruition in further quarters. With respect to orders for Q1, again, with respect to onshore orders, Q1 was in line with previous year. Don't forget, I think Christian just mentioned, that there's some orders forthcoming. We're now having some, let's say, success with the new frames. But it was in line with last year, I think, of EUR 0.8 billion, just shy of EUR 1 billion, and that was as expected.
Yeah. To put it briefly into perspective, so we are, let's say, on the trajectory on where we want to get it. I mean, we want to achieve the, let's say, last year's order intake. Keep one thing in mind, we limited ourselves to say, "Look, that is the amount of turbines we want to sell for the first phase," and ensure that obviously every, let's say, we test really everything out and we are very careful, and in that regard, that's the main thing. So but we are, I would say, bang on plan.
Thanks a lot. So the next three questions will be going to Chris Leonard from UBS, Sean McLoughlin from HSBC, and Alex Virgo from Evercore. So Chris, please go ahead.
Yeah, hello. Thank you for taking my question, and maybe it's an extension on the wind side and focusing on the offshore, European offshore wind development. Is there any comment from your side as to what we should expect in terms of potential UK offshore wind allocation of orders for you in 2026 or 2027? And equally, any comment would be helpful as well on recent European plans for the North Sea. Thanks.
Yeah, thanks very much for the question. Maybe, a couple of comments to offshore wind. If you look on the quarter one order intake, also just to flag it up, there's also one offshore order in Poland, which contributed to the order intake, in quarter one. U.K., Auction Round 7 , still ongoing discussions, not yet fully clarified, so it's too early to say. But yes, we are also looking obviously in certain projects there, and discussions are ongoing. On the 15 gigawatt, which came out of the North Sea Summit, or 15 gigawatt per year out of the North Sea Summit, yes, I believe obviously this will be actually great for the offshore industry or good, good momentum. We have to see now on how this is converted into auction schemes.
You may know that, Germany pushed its scheme out and is rediscussing, the framework, which is fundamentally a good thing, because at the end, it's not about the auction, it's about the FID. So I, would expect that out of this North Sea Summit, we see obviously momentum also creating in the offshore industry going forward, potentially not in 2026. It's more than coming in 2027, 2028.
That's helpful. Thank you.
Thanks a lot. Next question goes to Sean McLoughlin.
Thank you. Good morning. Just a question on the gas turbine mix. What's your current lead time on a new mid-size turbine, and how does that compare with lead times for heavy duty equivalent?
Yeah, it depends really, what type of mid-size, what type of turbine, and keeping a, let's say, flexibility there. As I said before, there's here and there are some slots, also 2027, 2028, which we try to balance, and these are the mid-size gas turbines than with multiple trains. There's also decent amount of reservation agreements on the mid-size gas turbines. But I would say today, you're talking about, let's say, minimum a year shorter than the large gas turbines simply because of the supply chain situation.
Thank you. And just to follow up, if I may, just thinking about the huge increase in CapEx commitment that we've had from the main hyperscalers, I mean, I guess that puts emphasis on urgency. I mean, are you seeing more interest in mid-size turbines that they can effectively obtain more quickly, or is the mix still across all your turbine types? Thank you.
No, absolutely, they are... Let's say the timing effect is a predominant decision criteria at the moment. So, if you can deliver faster, smaller turbines, they go for more smaller turbines. And you see also some solutions which I deem not ideal from an efficiency perspective. If I look on lots of small gas engines or so, which we do not do ourselves, but I see some solutions discussed just to bring power to the sites. What we are seeing is, and what is really, really good for us, we're seeing a very strong demand across all different frames of gas turbines, even below the mid-size gas turbines. So in that regard, we can play the full breadth of our portfolio, and that's super.
Thank you.
Thanks a lot. So the next question goes to Alex Virgo.
... Yeah, thanks very much. Morning, Christian, Maria. Thanks for taking the question. I wondered if you could just expand a little bit on that last one there. The 83 units that you've had on the industrial turbines and the color around the order backlog exposure to hyperscalers. I wondered if you could just talk a little bit about whether that number in the industrial turbines is really what's driving and underpinning the hyperscaler exposure. And as a sort of extension of that, your US peer has just signed a big framework agreement, multi-unit framework agreement. And I think you alluded, Christian, to that in your, maybe it was an earlier answer or your prepared remarks. You talked about the trends to multi-units in the context of the customer discussions you're having.
I wondered if you could give us a sense of whether it's likely that you're able to sign something similar or you're seeing that in the discussions you're having? Thank you very much.
Thanks, Alex. I hope also there I heard you correctly because our, the voice quality is from time to time, the call is not good. I mean, looking across the, let's say, how shall I say, diversity of the order book, and this is what I believe I heard from you, Alex, in terms of the different areas. Obviously, it's relatively evenly, distributed around the frames. I mean, yes, the biggest chunk in terms of numbers, more than, obviously 50% is the mid-sized gas turbines. You have it evenly distributed, really across, the different regions. Roughly 40% is US, as I said, 35% EU, 15% Middle East and China.
If you see the order book, for what we're currently having is roughly two-thirds is new unit, one-third is service. So, that is roughly the distribution around it. If you take the data centers on the 29 on the orders, and if you talk about the 29 gigawatts of reservation agreements, which we have outstanding, it's only half of this is data centers, and half of this is conventional businesses. What we're seeing, which also means only half of this is U.S. So this is obviously the diversity which we have in the order book. There was a second part of the question? The multi-unit. Oh, thank you. The multi-unit contracts. Yes, absolutely, we see it. We not only see it in data centers.
There are some applications we don't so prominently communicate it, because not every customer wants that. But there is also bigger multi-unit contracts outside the data center framework, which we have been taking and will continue to take. But we also see in the data center field, framework agreements for several years, and obviously lots of units, under discussion and also under conclusion in our order book.
Thanks so much. So now the last three questions go to, Vivek Midha from Citi, Vlad Sergievskii from Barclays, and, last follow-up from Phil Buller. Vivek, please go ahead.
Thank you very much, Tobias, and good morning. Hope you can hear me well. My question is on Grid, the margin of 17.6%, very healthy and in the upper half of the full year guidance range. Historically, Grid is not a business with that obvious a seasonality. So should we see the upper half of that range as a better guide for the full year margin? And can you maybe talk about the continued fixed cost regression effects you talked about last year versus pricing impacts and so on? Thank you.
Yeah. Thank you, Vivek, for that, and thank you for asking a question on our very nice profit development at Grid Technologies. So just maybe to preface this a little bit, so they did have a strong margin in the first quarter. They are also, you know, some underlying topics, like sometimes FX hedging, et cetera, one-time positive effects, but I don't want to focus on that too much for Grid Technologies. What they have done, and what they continue to do, is execute through their backlog very efficiently, looking at things like productivity. So underlying, we see a very steady positive development, and actually, you can see that not only quarter-over-quarter, but also year-over-year. So I wouldn't expect... I mean, it was high. I would really look at their guidance of 16%-18%, right?
See how that, let's say, is quite stably developing in the next quarters.
Thank you very much.
Thanks a lot. So next question goes to Vlad.
Yes, good morning, and thank you very much for taking my question. So gas turbine orders, obviously exceptionally strong in the first quarter. Could you give us an idea of how much did it extend your backlog duration in Gas Services? And also, more conceptual question: Is there a natural limit to how long backlog duration could get to? Is there a point when it becomes harder for customers to plan that far upfront?
... Yeah, yes, Maria. Do you want to take it, or should I?
So, yeah, how about I take the first one, Vlad?
Yeah.
Again, please correct us, again, it was a bit difficult to hear. But in terms of our backlog, which I showed earlier, the EUR 146 billion, of which 45% is service, this plays very nicely into the backlog of Gas Services. And I think we showed that quite nicely also at the Capital Markets Day, where we saw a step up in the margin, not only on new units, but also on service. And what's nice about the backlog in Gas Services, which is at EUR 60 billion, by the way, overall, a new record for them, is that if you look at the new units, you tend to have, depending on frame size, I think Christian just nicely described that earlier, it depends on the frame size on how long that remains in our backlog before ultimate execution.
Large frames are 3 years, maybe 3-4 years. Perhaps the smaller frames are between 12 and 24. But what's really nice about the, the backlog of Gas Services is the service backlog therein. And that has an average duration in terms of our long-term service program contracts of around 13-14 years. So that's what when I talk about visibility in the EUR 146 billion backlog, I don't just talk about the next year or the year after. I really talk about the visibility that we have, you know, beyond- towards the end of the decade and beyond.
Yeah.
And again, I think EUR 10 billion of the backlog that we see right now around will continue to be executed until the end of fiscal year, if you think about it from that perspective. And then an additional, let's say, more than that, between EUR 10 billion and EUR 20 billion executed into the next fiscal year, 2027. As a rule of thumb, again, it all depends on how much we refill the backlog and, of course, what we execute therein. Thanks for the question.
Thanks a lot. So the last question now goes to Phil, once again.
Yeah. Hi, thanks for the follow-up. I think a lot of the questions are trying to disaggregate the more traditional customer environment in GS versus the data center customer. So I was hoping just to clarify a little bit. I think you said a quarter of the backlog is data center now for new units, but is the book-to-bill in Q1 for those traditional customers comfortably above one? Reservation agreements, I know you don't disclose what the cash component is, but are there any reservation payments at all from traditional customer sets? And is there, you know, are you seeing signs of price elasticity specifically for that traditional customer set? I know in aggregate, pricing is very good, but I'm just trying to drill down on the situation for that more traditional customer set, please. Thanks.
Yeah, thanks. I mean, you, what you have to see in quarter one, revenue on gas is roughly EUR 3 billion, right? And you see the order intake on EUR 8.8 billion. So, and the answer is yes. I mean, you have a book-to-bill above one on the very conventional base, and this is why I was giving this 25% indication also. And we feel comfortable also with the existing other market. This is why I continuously say we are not dependent on the data centers, but they are the cream on the cake. And obviously, if you have a, let's say, early slot, you can really make nice profits around this. But, obviously, going forward, if you now... And then also in terms of reservation agreements, right? These things are also in discussions with classical customers.
But the timing pressure is a little bit more flexible, I would say, for utility-driven customers. But keep in mind, we have now the upcoming 10 gigawatts discussion in Germany, right? I mean, and absolutely, we are already long-term planning this in, and we want to serve this market, and we will be in, and but this is all considered at the moment. So I think across the board, it's a good market for gas.
Thanks very much.
With that, we would conclude the Q&A. Christian, I don't know if you want to have some closing remarks just at the end?
No, just an invitation also to the AGM or just to join us there in terms of giving a look back and a look forward. No, thank you really for participating in the call. It has been an interesting quarter. I'm very, very proud of our organization on how they execute through a demanding time, I have to say, seeing the geopolitics and everything and the high workload. Big thanks to everybody who was on the call. Big thanks to the Team Purple here at Siemens Energy.
Thank you so much, Christian. So with that, we conclude the call, and if you have any questions, you can always reach out to us at the investor relations team. Thank you. Bye-bye.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the Investor Relations sections of the Siemens Energy website. The website address is www.siemens-energy.com/investorrelations. Have a nice day. Bye-bye.