Good morning, ladies and gentlemen, and welcome to today's Siemens AG conference call. At the beginning, we would like to inform you about the fact that this call will be recorded and broadcast online. After the presentation, we will have time for a Q&A session. If you would like to ask a question, press star one on your phone keypad in order to register for questions. And with that, I would like to hand over to today's host, Lynette Jackson, Head of Corporate Communication. Ms. Jackson, over to you.
Good morning and welcome to today's conference call for Q1 of fiscal 2025. Today, I'm welcoming you here with our CEO, Roland Busch, and our CFO, Ralf Thomas. A few notes. This morning, we published our Q1 results. This presentation, as well as the speeches of our board members, as well as any other documents, can be found on our website.
There, you will also find the recording of this conference call after the fact. Of course, today, we will also have the annual shareholders meeting of Siemens AG. And both Roland Busch, as well as Ralf Thomas, will be there and broadcast live from 10:00 A.M. onwards. As representatives of the media, you have also received an online access code from us, so please do get in touch with our team should you still require the access code. Now, briefly on the rundown of this conference call. After the presentation, both gentlemen will be available for questions. Our conference call will end at the very latest at 8:15 A.M. And I would like to point out the Safe Harbor statement, which you will find at the beginning of the presentation. And with that, over to Roland Busch.
Thank you very much, Lynette. I wish everyone a good morning, and thank you for joining us today to discuss our first quarter performance ahead of our virtual annual shareholders meeting. We delivered a promising start of fiscal 2025, generating clear momentum for continued high-value growth for our stakeholders. Our strong strategic position in attractive markets, coupled with a balanced global footprint, is a solid foundation for mastering the ongoing macroeconomic uncertainties, even in the face of the current politically motivated tariff regimes and potential countermeasures. In a time of rapidly accelerating technological progress, our technologies are helping customers combine the real and the digital worlds in order to improve their competitiveness, their resilience, and their sustainability. At the World Economic Forum, my managing board colleagues and I held many discussions with partners, customers, and opinion leaders.
A key topic of these discussions was artificial intelligence and more and more its concrete applications in industry. And Siemens is right in the sweet spot. Due to our leadership in industrial AI, we can offer customers concrete results. Our technologies provide practically the operating system for industrial production and all related sectors. And with AI, we are raising this system's performance to a new level. I'll have more to say about this in a moment. But first, some highlights of the first quarter. Our solid top-line performance testifies to the trust of our customers that they place in us. book-to-bill was 1.09. The order backlog rose to a record high of EUR 118 billion. Orders totaled EUR 20.1 billion, 8% below the level of Q1 2024. We again saw strong momentum at Smart Infrastructure, where orders increased significantly compared to the already high level of Q1 2024.
At Mobility, orders were solid despite the very high volume from large contracts in Q1 2024. As expected, orders at Digital Industries started to recover. The book-to-bill ratio was above one for the first time in two years. The automation business delivered a significant increase compared to Q1 2024. The recovery was driven primarily by China, where we expect our customers to have largely finished de-stocking by the end of Q2. However, overall economic activity was still sluggish and investment sentiment soft in core industries such as automotive and machine building. Europe, our key region, continued to lag. Germany, in particular, was still in crisis mode, with companies and society urgently awaiting clarity and action from a new government. Overall, revenue grew 3% with strong contributions from Mobility and Smart Infrastructure, which in particular again achieved double-digit growth at its Electrification business.
At Digital Industries, revenue at the automation business remained low due to the ongoing de-stocking already mentioned. However, the decline was partially offset by a 15% increase at the software business. The region in the Americas grew 17%, fueled by strong momentum in the U.S., while Europe, the Middle East, and Africa, or EMEA, stagnated, and Asia and Australia declined 4% due to weak demand in China. But what really counts in the end is high-value growth. And here, we delivered again, despite the headwinds at our automation business. Our solid profit of EUR 2.5 billion at the industrial business exceeded market expectations. Basic earnings per share before purchase price allocation accounting, or EPS before PPA, reached EUR 2.22, excluding the gain on the Innomotics divestment. And a clear highlight, strong free cash flow all in was EUR 1.6 billion. We also made considerable progress in sustainability.
We've expanded our leading position, particularly in helping customers decarbonize. The products we sold to customers in fiscal 2024 will avoid around 144 million tons of CO2 equivalents over their lifetimes. This amount is much higher than the 121 million tons of emissions that we generated along our entire value chain from scopes one, two, and three in fiscal 2024. And regarding our own emissions, we are making great progress. We reduced the CO2 equivalent emissions in our own operations by 60% compared to fiscal 2019, thus reaching our 55% target for 2025 ahead of time. This achievement is also reflected in the designation of our location in Fürth, Germany, as a sustainability lighthouse by the World Economic Forum, or WEF for short.
And since all good things come in three, our F80 location in Erlangen, Germany, has been designated a WEF Digital Lighthouse Factory alongside our locations in other places. With our digital and sustainable technologies, the team in Erlangen has increased productivity by 69% and cut energy consumption in four years by 42%. In more than 100 use cases, we've used AI to raise the location's digital twin to a new performance level. At this Erlangen location, which is part of our EUR 2 billion investment program, we are building the Industrial Metaverse. You're familiar with our One Tech Company program and with our North Star, a company with stronger customer focus, faster innovations, and higher profitable growth. That's our goal. The acquisition of Altair, a move that will expand our strong industrial software business, is a convergence of our One Tech Company program.
A cornerstone of our One Tech Company program, I mean. The regulatory approval process is on track. Altair's shareholders approved the transaction a few weeks ago. Depending on the progress of the regulatory approval process, the transaction may close in the first half of calendar year 2025. For current planning purposes, we are still assuming that closing won't take place until the second half of the calendar year. We'll continue to provide you with updates on the other tracks of the One Tech Company program and will give you a strategy update at our Capital Market Day on December the 9th. Some people wonder if AI isn't just a lot of hype. But I can state very clearly, in our world, in our automation, mobility, infrastructure, and healthcare businesses, that is definitely not the case.
Every advance that makes the development and training of large language models more efficient will accelerate the adoption of industrial AI. In this area, Siemens is the ideal partner. With our domain know-how and our strong partners like Microsoft, AWS, SAP, and NVIDIA, our customers can apply AI at scale. Our own AI applications and those of our partners are already accessible via Siemens Xcelerator, our open digital business platform. By intensively applying industrial AI, we are supercharging the digital transformation in all industries. With the help of our AI, customers can use their data to make better and faster decisions, boost their productivity, reduce complexity, speed up time to market, and use their resources more efficiently. At this year's Consumer Electronics Show in Las Vegas, we launched a new series of industrial AI products.
With our partner, NVIDIA, for example, we launched a photorealism-enhanced digital twin that is the industrial metaverse at the push of a button. I'll tell you more about this innovation at the annual shareholders meeting. We are collaborating with JetZero, a startup led and backed by aviation specialists, to develop and produce a revolutionary aircraft whose wings are designed to improve fuel efficiency by 50%. JetZero will use our latest AI-powered industrial software and automation technologies to achieve its ambitious goal by 2030, something that will only be possible, said JetZero CEO Tom O'Leary with Siemens Technologies and AI. Now, here are a few more examples of long-term partnerships in which we are combining Siemens Xcelerator and our domain know-how to strengthen our customers. For 20 years, starting from day one, Siemens has been a technology partner to multi-championship-winning Red Bull Racing.
During this period, we've jointly pushed the boundaries of the latest digital twin technology for design, engineering, testing, and manufacturing. We've signed a multi-year agreement with U.S.-based Compass Datacenters to support their aggressive scaling targets for data center construction. Smart Infrastructure will supply up to 1,500 prefabricated units for a medium voltage solution. Due to their customized and modular design, products can be more easily deployed, require less maintenance, and are, as a result, cheaper. Finally, a great example from our mobility business, high-speed rail transport for the U.K.'s HS2, has awarded Siemens several key infrastructure and long-term maintenance contracts for up to 15 years, with a total value of GBP 560 million. For the first time, we're using automatic train operation over the European train control system in the U.K.'s national high-speed rail system. This innovation will improve capacity, punctuality, and energy efficiency.
The transition of a major part of Digital Industries' software business to software as a service continues its successful advance. I'm very pleased at this development. The growth of annual recurring revenue, or ARR for short, again reached a very healthy level of 14% compared to Q1 2024. The cloud portion stands at EUR 1.9 billion, or 42% of ARR. The team aims to approach the 50% mark by the end of fiscal 2025. All indicators, the number of customers, the share of small and medium-sized enterprises, and customer transformation rates continue to be headed in the right direction. With this positive perspective, I'll turn the floor over to you, Ralf.
Thank you very much, Roland. Ladies and gentlemen, a very warm welcome to our press conference from me as well. It is now my pleasure to share further details with you on our promising first quarter of fiscal 2025 and our expectations for how our business will develop over the rest of the fiscal year. Let's start with Digital Industries, or DI. At EUR 4.2 billion, orders for DI were 6% above the prior year quarter. Its book-to-bill ratio was 1.04 and was thus above one again for the first time in two years. It was encouraging to see that all of DI's automation businesses showed material improvement year over year and a book-to-bill ratio of above one. Its software business continued its path of clear growth with orders exceeding EUR 1.3 billion for a book-to-bill ratio close to one.
This increase was mainly driven by strength in the Electronic Design Automation, or EDA space. As Roland Busch has already mentioned, the underlying market dynamics and manufacturing output were still muted in important customer industries, and investment sentiment was soft in key regions, especially in Europe. However, DI saw further progress in de-stocking in China. We continue to expect that, for the most part, the stock levels of DI's customers and distributors will largely return to normal levels by the end of the second quarter of fiscal 2025.
Our order backlog at Digital Industries increased moderately to EUR 9.6 billion. DI's software business, which was also supported by a strengthening US dollar, accounted for EUR 5.7 billion of this backlog. In its automation business, the order backlog stood at EUR 3.8 billion and has thus nearly returned to a normal level. Let us now turn to Digital Industries revenue, which was 11% lower in keeping with the tendency that we had announced previously.
In this area, DI's software business achieved significant growth of 15% compared to the weak prior year quarter. Growth was particularly strong in the EDA business, which was up more than 30%. The PLM business, or product lifecycle management, was up 8%. On the other hand, revenue in DI's automation business was down 19% to EUR 2.7 billion, and we assume that this result means that we have now reached the trough. Discrete automation declined 24% and was again most notably affected by de-stocking at our customers and distributors in the short-cycle factory automation business. Process automation was down just 2%. DI's profit margin reached 14.5% with a robust conversion in its software business. Lower revenue in DI's automation business led to reduced capacity utilization and consequently to margin contraction, as expected.
Now, as announced at our annual press conference last November, DI's teams have already been achieving solid progress in executing capacity adjustments in some regions. In the first quarter, these measures led to severance charges of EUR 52 million, which burdened DI's profit margin by 130 basis points. Now, we expect that we will soon finalize the full assessment process regarding the required adjustment and the necessary measures for training and continuing education. Productivity gains in connection with continuing stringent price discipline supported a net positive economic equation for DI in Q1, which we also aim to maintain for the overall fiscal 2025 year. In the first quarter, DI achieved solid free cash flow of more than EUR 600 million, benefiting greatly from lower receivables. Now, let me give you the regional perspective of DI's business performance. As mentioned, recovery in orders for DI's automation business gained some traction.
In China, DI's orders rose sharply compared to the Q4 of fiscal 2024. Compared to the very weak Q1 of fiscal 2024, DI's orders increased 14%. DI's key sales markets in Europe were also up sequentially despite muted economic conditions. In line with a low level of short-cycle orders in DI's automation business in previous quarters and further de-stocking, DI's revenue in all key regions declined materially, as expected and as announced. This decline was most notable in Europe and China. The assumptions we laid out back in November 2024 regarding the development of DI's business are also still valid. We confirm our fiscal 2025 guidance for comparable revenue growth at DI in the range of - 6% to + 1% and for its profit margin to be within the target quarter of 15% - 19%.
Now, from today's perspective, we anticipate that once de-stocking is completed everywhere, demand will increasingly improve in the second half of fiscal 2025. This trend will support both the top and the bottom line. As you can see on page 17 of the appendix, official sources point to the emergence of further green shoots in the typical early cycle verticals such as electronics and semiconductors. However, we will continue to closely monitor if and how conceivable tariff disputes will impact the macro environment. For the second quarter, we expect Digital Industries orders to close to the level of the prior year quarter. In this connection, we assume that orders will improve in DI's automation business, with a clear decrease in volume expected for EDA software business. For Digital Industries revenue growth, we expect a decline at high single percentage digits .
In addition, we expect revenue in DI's automation business to grow sequentially, whereas its software business is expected to be flattish. In this connection, we expect the decline in the EDA business to offset the increase in the strong PLM business. We expect DI's profit margin for Q2 to be about the level of Q1. Now, let's turn to smart infrastructure, or SI, which delivered outstanding performance yet again in the first quarter. The SI team achieved strong growth in orders and revenue in healthy end markets and supplied further evidence for continuous improvement of the operating profit margin. In this area, SI has achieved year-over-year improvement for the 17th quarter in a row. In total, SI's orders rose by 5% to record levels of EUR 6.2 billion. This gain was most notably driven by a 10% growth in its electrification business.
That business benefited again from a series of larger contracts, primarily for data centers, as well as from customers in the energy and industrial sectors. The book-to-bill ratio reached an impressive level of 1.17. Smart Infrastructure's order backlog rose to an all-time high of EUR 19.8 billion and thus provides excellent visibility for the remainder of fiscal 2025. Revenue growth at SI was broad-based and reached 8% in line with our expectations. The largest contribution came from its electrification business, which was up 12%. At 9%, SI's electrical products business also continued its consistent growth path from a high level. Its buildings business showed 5% revenue growth, which was driven in part by healthy service business. SI's stringent order backlog execution once again led to further expansion of its operating profit margin by 50 basis points year-on-year to 16.9%.
Smart Infrastructure's excellent performance continued to benefit from economies of scale made possible by higher revenue and a higher capacity utilization. The economic equation was again clearly positive. It was supported by prior measures for strong pricing and by sustainable productivity gains, which was more than compensated for the impact of cost increases, especially in wages and salaries. From a seasonal perspective, SI got off to an exceptionally good start to the new fiscal year for both its free cash flow and its cash conversion rate. This start was supported by, among other things, advanced payments in large orders. Looking at the regional development, we saw robust demand, in part with strong order momentum. This development was driven by Europe outside Germany and by the Middle East. Orders at Smart Infrastructure in the U.S. were up 9%, again benefiting from strong data center demand.
SI's business in China continued to show soft topline development across all businesses in a challenging environment. Fueled by strong backlog execution, SI's revenue grew in most regions. In the USA, Smart Infrastructure achieved outstanding 20% growth in revenue, and key growth engines were the electrification and electrical products businesses. In its service business, SI delivered broad-based growth of 8%. Now, in its main verticals, we continue to expect very consistent and resilient growth momentum of SI. For the second quarter, we expect SI's growth rate for comparable revenue to be at the upper range of its full-year growth guidance of 6%-9%. In particular, the high order backlog of scheduled orders gives us great confidence in this regard. We also anticipate that SI's operating profit margin in the second quarter will come in at around the midpoint of the full-year target range of 17%-18%.
In addition, we may see an extraordinary gain in Q2 related to the closing of the sale of the wiring accessories business. Now, let's turn to Mobility. Mobility started fiscal 2025 with a solid performance. As expected, Mobility's orders at EUR 2.7 billion were lower than in the prior year quarter, which had included much higher volume from large order bookings. With its healthy margin profile, the accompanying base business led to further improvement in the gross margin for Mobility's order backlog, which currently stands at EUR 49 billion. This backlog includes more than EUR 14 billion of attractive service businesses. Mobility's revenue in Q1 was up 10% on broad-based growth, with a material contribution from the service business and the successful execution of the order backlog in the rolling stock business. The profit margin of Mobility reached 8.4%.
However, a decline in the rolling stock business, which was mainly due to a less favorable business mix, outweighed the revenue increase in the service business. Mobility's free cash flow was rather muted in the first quarter after exceptionally strong free cash flow performance in Q4 of fiscal 2024. Now, looking at the expected project payment profiles and the foreseeable timing of order awards in the sales funnel, we expect Q2 to be soft yet again. Nevertheless, in the second half of fiscal 2025, we then expect mobility to see a material catch-up in free cash flow, mainly driven by larger advanced payments for new orders to come. Our assumption for comparable revenue growth at mobility for Q2 is trending toward the lower end of the full-year guidance of 8%-10%.
In addition, we assume that mobility's second quarter profit margin will also come in at the lower end of our full-year guidance of 8%-10%. Let me now briefly address our activities below our industrial businesses. Siemens Financial Services achieved a rock-solid Q1 performance. From today's perspective, SFS's second quarter profit is forecast to be higher year-on-year. In particular, it is expected to benefit from a strong profit contribution from SFS's equity business, where we are expecting, as previously announced, the sale of a stake in an equity investment in India. A major driver for Siemens' net income in the first quarter was the sale of Innomotics, resulting in EUR 2.1 billion in gains. We sold Innomotics to KPS Capital Partners. The gain was recorded in discontinued operations.
Siemens' free cash flow performance in the first quarter was off to a seasonally very strong start into the new fiscal year, in particular due to the free cash flow of EUR 1.7 billion from our industrial business. Our global team's stringent working capital management contained the increase in operating working capital at EUR 400 million despite the favorable development in the future. We are very confident that we will achieve an industry benchmark level of cash flow return on revenue in the double-digit percentage range once again in fiscal 2025. Liquidity outside of free cash flow was materially strengthened through EUR 3.1 billion in proceeds from divesting Innomotics. Further inflows are also being recorded from the continuing sell-down of our Siemens Energy stake, which are now below a 15% threshold. Our capital structure measure, the ratio of industrial net debt to EBITDA, was at 0.4 in Q1.
In addition, we have an industry-leading AA investment grading from Standard & Poor's and Moody's. As a result, we will be able to react from a position of strength. Following this promising start to 2025, ladies and gentlemen, we confirm our guidance. However, we will, of course, continue to monitor macroeconomic volatility closely to be able to act swiftly if need be. The direction of all our actions is clear. We will continue to create value by growing profitably and by reliably and continuously generating high levels of free cash flow. Thank you very much for your attention and for your interest in our company. And now we're looking forward to your questions. And with that, back to Lynette.
Thank you very much, Roland and Ralf. We now have until 8:15 A.M. to answer your questions. For technical reasons, we cannot mix German and English language questions. We will therefore start with the questions in German. If you've logged on to the English language conference, please do ask your questions in English. We will then also answer them in English. And now back to the operator.
Ladies and gentlemen, we will now start with the Q&A session. If you would like to ask a question, please press Star one on your phone keypad. You will then hear a sound, which means that your entry in the waiting list has been confirmed. If you would like to withdraw your question, please press Star two. Participants are asked to use your actual phone instead of a headset during the questions. If you have a question, please press Star one and one second for the first question, please. And the first question from Axel Höpner, Handelsblatt.
Yeah, good morning. I've got two questions, and the first relates to SI, and the results might be less than expected. And the strong dollar, does that impact the company's business, or will there be some kind of balancing-out effect?
Thank you very much, Mr. Hübner. Well, the turnover or the sea change at SI, as you called it, will not impact our plannings related to resources or what we are going to do over the next few years. We have shown you a medium and long-term perspective. What you mentioned refers to the short-term perspective. We said, and this is what we said in November, we assume that the revenue development will be in the low double-digit negatives. So this is what we expected.
Surely, we were happy that incoming orders, you know, or the order intake has developed positively, and we can say that this is a kind of lasting, sustainable, tangible development, which can be then derived. I believe the clear answer is no. This is what we expected, and we planned resources and capacities. Surely, we do not plan from quarter to quarter. The strong U.S. dollar, surely that's a challenge for all those working in this marketplace.
Well, we have the luxury situation that we've got a very good supply chain, global supply chain, so we do not expect any major changes when it comes to allocating capacities or resources. Surely, it is always desirable that you have, say, stable planning or secure or safe planning. We just have to get used to and adjust to what's happening. We feel very well armed to face all challenges, and we believe that our guidance will not really be affected.
The next question comes from Alexander Hübner from Reuters.
Yes, good morning, and I hope you can hear me.
Yes, we can.
Two questions. You mentioned that selling Siemens Energy shares had a positive impact during this quarter. Could you give us some figures in this respect? And I would like to know, did you sell any, say, holdings directly, or did you do it through the pension funds? And the second question, you mentioned the, you know, the exit or divestment, you know, Siemens Healthineers. I can't really imagine how you want to go about it or how it could be done if a respective resolution would be taken because it would be too large for a financial investor.
I cannot imagine a major merger because of the market position. So what do you think? Is it primarily, you know, there might be some income for Siemens AG, or would you or have you got some kind of spinoff in mind so that you can pay some dividend to your shareholders?
Well, thank you very much, Mr. Hübner, for your question. You know, selling off Siemens Energy shares, I can answer it like this. We are fully transparent, and we also have reached the reporting threshold of 15%. So we've reported it, and we even made progress in this respect. And we stand at 14.3%. It is the current situation. And if you extrapolate this to your math, so to speak, then you will see it's around EUR 1.2 billion. And talking about the, you know, forthcoming development, we are going to inform you about it.
We believe that this is a gradual development. Like I said, we were not surprised about the development. We announced some of it. This, of course, also means that we will not have any income statement effects or impacting the profit and loss account. Certainly not. We've got the respective methods, and it will not influence our, say, the balance sheet and the cash flow, you know, ends up with us, so to speak, and the financing component for financing healthcare. This is something which we announced as well. This is not a surprise either. I think you said direct or indirectly through the pension fund. I can say because of the structure, it's direct. There is direct selling of, so we do it in small steps, and this means we can handle it in a very, say, relaxed manner.
Healthineers, I can repeat what we said over the last few years. Of the EUR 16 billion we invested in Varian, and we want to do things according to plan. And we also have diagnostics. We also looked at it, Atellica. I think this is moving in the right direction. The business is improving. And here you see the respective figures. In addition, we also said that we are going to sell shares of Siemens Healthineers in order to finance the Altair transaction. Everything will be discussed and announced at the Capital Market Day on the 9th of December.
And the next question comes from Michael Flämig from the Börsen-Zeitung.
Yes, good morning, Mr. Busch and Mr. Thomas. Geopolitics, what do you think will be the impact of, you know, the current developments in this world?
So first of all, free trade will help the global economy. If this is restricted because of tariffs, then this might, you know, if this will have an impact on our customers, on our markets, and we are going to see that in the midterm. We are a global company. We've got a very strong footprint in the United States, in China, and in all major markets. 40,000 people is the headcount in the U.S. We invested in new facilities, electrification, trains. We've got a very high local value added. So tariffs and the influence is not zero, but nevertheless, it's mitigated or it's cushioned to some extent because we have local production facilities. And everything else must be seen. Surely, there are counter effects.
For instance, if there are any tariff increases, if this changes the value creation structure, then of course, new facilities have to be set up, capacities have to be expanded, and this means new business for us.
And now the next question from Angela Maier, The Market/NZZ .
Well, good morning. I've got a little, I hope everyone can hear me. Now I've got a short follow-up question about Healthineers. So you mentioned financing. Do you still stick to your plan of selling it by the figure you mentioned? And I would like to know what is SIMATIC, what is its share or proportion of revenue? And the second question, and this refers to virtual control systems, you seem to have quality problems. And you know, here, these problems occurred at your customer Audi.
And you know, you talked about virtual control systems and in technical terms, you're lagging behind other competitors. You fell back, so to speak, by [audio distortion] . And this, you know, is about the stability of these virtual control systems. And I would like to know how would you like to, you know, catch up? How would you like to, how are you going to go about it?
First question, I think Ralf, you could answer this question better. And I think you mix up things. Virtual control systems and industrial control systems. For the industrial control systems, here we have an offer, and we also have an offer. And I do not know of any quality issues you mentioned. What you mentioned is the virtual PLC. Here, we are really leading.
And at Audi, and this is what I'm going to address at our shareholders meeting together with our colleagues from Audi, we are very well on track. And you know, they are going to offer this technology worldwide after the first pilots. You know, they are scaling up things in their production facilities in the plants. We are very well on track. We can say that we are leading in this respect, far ahead of the competition, the ones which you mentioned, individual products. Surely, we do not announce any volume developments.
You know that, Mrs. Maier. But an estimate, a rough estimate for the share, I heard, or I remember a 40% announcement. I'm sure we did not mention this figure. And the next question from Wilfried Eckl-Dorna, Bloomberg News.
Yes, good morning. Well, I've got one supplementary question about tariffs and the United States. Mr. Busch, you said there might be counter effects, you know, things that might change the value creation system. What do you mean? Which areas might be affected? You know, we're looking at the United States. All this from your perspective.
Now, if you listen to the discussions today, for instance, Germany, here we talk about, you know, industrial companies leaving the country because of tariffs and other effects. So you ask yourself, you then ask yourself where to allocate capital. Invest in the United States. One reason, low energy prices, massive support is the second reason. So the red carpet is being rolled out so that you can set up production facilities very quickly. Here in this country, it takes a bit longer. It also means investment, investment in the United States or in other countries because, you know, if you wanted to diversify. Now, investment in the United States.
Here, I can say if we invest there, then you want to do it fully automated, fully digitalized because labor isn't sufficient, and also trained and skilled workers. You get fewer and fewer of these, and Siemens has a strong offer, and then PLC. You know, this is what has been made for the market because of virtualization, the virtual systems we can program no matter which in which language, in any language. So even computer languages can be handled. We can talk to IT developers. They are stronger in the United States. They've got more capabilities because of automation. They will be more flexible, and they will also be more cost-effective. This means we've got a very strong offer in this respect. Now, if companies also want to localize in the United States, then of course the supply bases will be brought along.
This means we will have a very high level of automation in the respective facilities. Let me add to that, just to give you an idea, a sense of what's happening. Last fiscal year, more than one quarter of our revenue was generated in the United States, increasing trend. We've got 48,000 headcount in the United States in many dozens of production facilities. So we can consider ourselves to be a local company. And in addition to the tariffs, there are other parameters which the American administration is thinking about, you know, corporate taxes or things like this. So this means we've got a whole mixture of different influencing factors. And of course, we can to inform you right away when this or that happens, which the repercussions are, which we expect will affect us.
Yes, thank you very much. We now have got questions from the English channel. The audience is now going to switch the English room. So please be patient for a moment. So we will now switch to the English questions. And the first English question comes from the line of John Revill from Thomson Reuters. Please go ahead.
Good morning, gentlemen. Can you hear me?
Yes.
Super. So just looking on the tariff situation, I was wondering, do you foresee any kind of knock-on effects on the tariffs in terms of your customers being a bit worried about tariffs and also maybe reducing their sales so they're going to be buying less stuff from Siemens in the future? Basically, what's kind of the knock-on effect of tariffs you foresee in the future? That's the first one. And then secondly, obviously you said about Germany being particularly weak at the moment and you're hoping for a new government. What do you want the new government there to do? What's the most important thing that you need to get Germany moving again? Thank you.
Thank you, John. Let me start with the first one. It's hard to quantify knock-on effects as you described then. Of course, and certainly uncertainty around tariffs or any other major material impact from an important marketplace like the U.S. is creating uncertainty, and uncertainty is not good for decision-making in investment industries, obviously. So therefore, there's certainly a hesitation, if I may put it that way, on making decisions as long as there's no clarity on the tariffs, the what, the when, and the how.
But structural demand is so massively influenced by mid and long-term requirements and the need for further productivity gains in our customer industries, plus also sustainability matters, even though they may not be that attractive at the moment to discuss politically. They are there. Scarcity of resources is not only around sustainability. It's also around efficiency. Making best possible use of scarce resources is an economical imperative. So therefore, we are very firmly believing that we do not have a structural change in demand on the way forward. There may be hesitation here and there, but that will go away. So we feel very comfortable with the place where we and our portfolio are positioned.
Excellent. Okay.
To your second question, I mean, I recently published the 10 points on LinkedIn, and I can give you a couple of points, which I believe we need to do quickly. Number one, and this is a call to address Germany, but in particular to Europe, we need to reduce bureaucracy and regulations extremely fast because we are throttling our innovation speed with regulations, which are just too ambiguous and too strong. We need competitive energy prices and a more pragmatic, intelligent energy policy.
We should focus on, and if you really want to incentivize and support technologies, we need to focus on certain future technologies and support them in the introduction in the market. This is all about innovation speed. We need to modernize our infrastructure with additional capital, eventually also leverage private capital. We need all hands on deck right now. Those people who are living in our country, they should work and contribute as much as possible. And we need to attract the best talents from the world. We need free trade agreements.
It's impossible that we are negotiating for 20 years on free trade agreements, in particular in a time where you have tariffs left and right. Free trade agreement is very good. So, for example, India, that should be next one. And last but not least, it would be very good if Europe would be one market, not only one capital market, but also one market for goods, because then scaling is much easier. And in these times of digital technologies, AI technologies, scale is of essence. So therefore, this would be a couple of points which we believe should be sorted out as fast as possible by a new government.
Excellent. Thank you.
We have to close the conference call now. Thank you very much, ladies and gentlemen, for your interest and for participating today. Our conference call for analysts with Roland Busch and Ralf Thomas will begin shortly at 8:30 A.M. The analyst call will be broadcast live at siemens.com slash analyst call. You'll hear from us again at the latest on May 15th when we release our second quarter results. Meanwhile, stay in touch. Thank you very much.