Good morning. Welcome, everyone. We are here to talk about growth: sustainable, profitable growth. This is important: accelerated growth. Just look at what we have done in the last five years since we have become a focused technology company. This was our growth trajectory for the period starting fiscal year 2021 until fiscal year 2025. Average revenue growth: 8% per year in this period, up from 2% in the previous decade. Average profit margin of our industrial business: 15%, up from 10%. Average free cash flow margin: 13%, up from 7%. The total shareholder return of 151%. We outperformed the DAX and other indices. Higher growth, higher margins, higher free cash flows. This successful performance continues. Let's take a look at our most recent past: fiscal year 2025. It was another record year for Siemens. Our orders reached EUR 88 billion, 6% above prior year's level.
Revenue grew by 5%, a total of EUR 78.9 billion. A book-to-bill ratio of 1.1, a high-quality backlog of EUR 117 billion. We move with confidence in our fiscal year 2026. Our industrial business showed a strong performance, a record profit of EUR 11.8 billion. Our free cash flow at a new historic high: EUR 10.8 billion. This means we turned 14% of sales straight into cash, with EUR 10.4 billion record in net income for the third consecutive year. Finally, we achieved earnings per share pre-PPA of EUR 10.71. We adjusted this, as you know, for effects from Dotmatics, Altair, and Innomotics. We achieved this in spite of substantial uncertainties all around the world: geopolitics, new tariffs, and protectionism, slow consumer spending. We created substantial value for all our stakeholders. Now, let's take a look at the performance of our industrial businesses.
Let's start with Digital Industries. We met the guidance, as we did with all our businesses. Revenue declined by 4%, as we had predicted, because of a difficult market environment for our automation business and against a very, very strong base of comparison for our software business. Profit margin: 15.9%. This, by the way, excludes effects related to Altair and Dotmatics, which were not part of our guidance. Smart Infrastructure: 9% revenue growth. They delivered at the upper end of the guided range, and profit margin was even more impressive with 18.3%. That's an all-time record and above guidance. Congratulations to the team. Mobility: strong revenue growth, again 10%. That's the upper end of the guided range. Excellent execution. There is a huge backlog of orders, and the team is just producing and delivering. At the same time, they successfully balance risk and opportunities.
The result: industry-leading profitability and free cash flow. Siemens today is stronger than ever. Our strategy works. We grow by combining the real and the digital worlds. Our ambition keeps growing too. With our ONE Tech Company program, we are making changes to the fabric of our company and unlock even higher growth in the future. Now, when we talk about our fabric, there are two important aspects. One is the portfolio, and the other one is our operating model. Our operating model, this is how we support and strengthen our businesses with world-class technologies and services, with higher efficiency and a huge set of high-quality industrial data so that our businesses can innovate faster and serve our customers even better. Now, let's take these two aspects one by one. Our portfolio.
In the last five years, we have put particular focus on streamlining it, preparing ourselves for the transformation, both through divestments and high-growth acquisitions. In 2020, we spun off Siemens Energy. In the following years, we divested our so-called portfolio companies, companies for which Siemens was no longer the better owner. Six years ago, their total evaluation was estimated to EUR 1.5 billion. In the end, our proceeds from these divestments totaled EUR 7 billion. Focus on where we can create the most value, also through disciplined acquisitions. Of course, always along our strategy to combine the real and the digital worlds. We acquired intelligent hardware companies, for example, Industrial Drive Technologies for ebm-papst, Trayer switchgear, Danfoss Fire Safety, C&S Electric in India for electrical and electronic equipment. On top, we strengthened our digital business with three SaaS acquisitions, all cloud-native.
Sqills: a provider for inventory management, reservation, and ticketing software for our rail customers. Supplyframe: a platform that connects design and sourcing of electronic parts. Brightly: a provider for asset and maintenance solutions for buildings. In 2025, we closed the acquisitions of Altair and Dotmatics. With Altair, Siemens has now the world's most complete portfolio for AI-powered design, engineering, and simulation. Our customers can now build the most comprehensive physics-based digital twins. With Dotmatics, we are adding more than $5 billion to our addressed markets. Our customers can now build a digital thread all the way from R&D to production. This helps them bring medicines and biochemicals to the market more quickly and at lower cost. Now, we make another important step towards a highly synergistic Siemens portfolio. We plan to deconsolidate Siemens Healthineers.
This will unlock long-term value for all our shareholders because it will allow both companies to tap fully into their respective growth potentials. Siemens Healthineers is a success story. Since its IPO, the company has grown from EUR 13 billion in revenue in 2018 to EUR 23 billion in 2025. The Varian acquisition contributed approximately EUR 4 billion to this. Industry-leading margins, a best-in-class product offering, reliable cash flow, high free cash flow conversion. A strong, attractive business, but one with increasingly less and less synergies. Siemens Healthineers serves markets which are increasingly different. They are different from the core markets of Siemens. For example, regulation in healthcare is comprehensive and increasing. Digitalization, in the way that we do it at Siemens today, does not really scale into the healthcare sector. Through the planned deconsolidation, Siemens Healthineers will benefit from a significantly higher free float.
A leading pure-play medtech champion, more attractive for the capital market. What happens now? We intend to transfer 30% of shares to Siemens AG shareholders by a direct spinoff. As a minority shareholder, we will continue to participate in the attractive business of Siemens Healthineers. In the medium term, we intend to reduce our shareholding to a financial asset. The transaction still needs regulatory clarification and a green light from both shareholder meetings. More details will follow in early Q2, calendar year 2026. Let me assure you, Siemens is committed to managing its investments in Siemens Healthineers in a responsible and shareholder-focused manner. A new Siemens has taken shape.
A company with less complexity and with simplified governance, with a fast-growing digital business, with an unmatched portfolio of industrial software and digital services, and with a strong portfolio in hardware, connected hardware that will be increasingly soft-defined and enhanced with AI. In short, a Siemens with a highly synergistic portfolio ready to scale. Portfolio matters, but there is more to our fabric than the mix of our businesses. When we say we are changing our fabric, then we also mean we are improving our operating model. Remember: stronger customer focus, faster innovations, higher profitable growth. Siemens is a strong company with a rich history, but this means legacy too. Too many systems, for example, ERP systems. Still, many silos, for example, data silos. Every single bit of this legacy made sense at a certain point in time, but times have changed. The world has become more competitive.
Companies need to be more resilient. Scale matters more and more. Speed matters more and more. We are giving our business an efficient, optimal environment so they can focus, so they can innovate faster, they can serve our customers better. That is how our new operating model is all about. We are building and rolling out services for all of our businesses. Highly standardized, delivered in highly efficient ways, always up to date with the latest technology, and at world-class quality for everyone and at Siemens to scale. We do that because the world is squeezing out small. Digital tools allow us to use economies of scale in every possible way. Scale matters for data. Scale matters for AI. Scale matters when you want to be a powerful partner in a global ecosystem.
That is why we are creating one data fabric, one technology fabric, and one sales fabric for all Siemens. Let's look at these fabrics one by one to see how they can help our businesses grow faster. Let's start with one data fabric for all of Siemens. We are tearing down walls and bringing data where it belongs together. One ERP system, one CRM system, one data layer for internal data, for customer data, for external data, all connected, available real-time. Today, our customers can already use 250 data products, and with our data, we are feeding our AI models. Because scale matters, our customers and partners want to connect into our data fabric. We started with machine tool industry. Seven companies joined an alliance to pool data. Here is what our partners have to say.
For Voith, we believe that only secure and scalable data collaboration unlocks the full potential, especially for industrial AI in manufacturing and production. By joining forces with industry leaders, we aim to accelerate innovation, improve efficiency, and shape the future towards a data-driven production. For that, you need to come to a joint model, to a joint sharing of data between the different processes. This is the reason why we said we need to join that alliance to bring together all that data, enhance the data with AI to come up with the next big jump in productivity for our customers.
One data fabric. Next is one technology fabric. This means technologies and services which our businesses need for their success. We build them once for everyone at world-class level. One set of technology building blocks. Take, for example, our software as a service business.
We can create the supporting infrastructure once for login, distributing, patching, cybersecurity, and do that for all our SaaS offerings. The specific application on top is the differentiator and creates the value for our customers. Or take software engineering. Today, we have 30,000 software engineers. They use roughly, you won't believe it, 900 separate versions of software development tools. We plan to consolidate these into just a few dozen standardized tools. This will boost productivity. And one industrial foundation model. I will talk about that later. Finally, number three, one sales fabric. Let me be clear here. For different markets, Siemens will still have different go-to markets. We address them through six sales organizations. Four: automation, buildings, electrical products, electrification and automation for mobility, and for software. The important part, though, is all of these sales teams are using the same sales fabric. What does that mean?
Shared tools at lower cost, rigorously standardized, data-driven for full transparency, real-time, orchestrated by stringent account management, channel, and partner management. This means Siemens will sell with one digital marketplace, one sales toolset, one vertical approach. Just to give you a simple example, all six teams have started using one and the same digital identifier for customers. This increases transparency and visibility. We see now in real time and holistically what each customer wants and buys, but also we see what they do not buy yet from us. That is where we are unlocking more and more sales opportunities. Also, more standardization means less back-office work. In automation, for example, we are doubling the share of salespeople who carry a quota. In short, with greater transparency, we can allocate resources better, and this will help us grow faster. Now, where will growth come from?
First of all, we are in a good place because we are offering what the world needs. We are positioned along secular growth drivers: automation, digitalization, electrification, sustainability, and artificial intelligence. AI for the real world. Let's have a look at our markets. Our addressed markets grow at approximately 6% per year on average. In five years' time, this adds up to a total addressable market of EUR 650 billion. The digital markets therein grow much faster by 11% to EUR 175 billion by 2030. In addition to this, we are tapping into expansions of our total addressable market. They are adding up to EUR 50 billion in fiscal year 2025, but we expect them to grow between 14%-18% per year on average until 2030. These are very attractive growth areas for us.
They include new AI applications and products, AI factory capabilities, life science software, just to name some examples. We are able to address these markets organically. We will, of course, also evaluate opportunities for either partnerships or acquisitions. In short, our addressed markets are growing, and we are addressing market expansions, which are even growing faster. Siemens is accelerating its growth. At our capital market day 2019, we said 4%-5% we delivered. At our capital market day in 2021, we said 5%-7% we delivered. Again, here is our new midterm ambition: 6%-9% comparable revenue growth. This is our expectation only for our existing portfolio, excluding Siemens Healthineers. Any growth from total addressable market expansions is not reflected in this ambition. Of course, we aspire not just growth, but profitable growth. Growth that translates into strong earnings per share.
Our midterm ambition here is EPS per share pre-PPA high single-digit increase. Let's zoom in for a moment and look at actual growth levers for growth. What are we doing strongly to tap into our growth markets and our growth opportunities? There are four big levers: grow digital, grow regions, grow vertical, and grow AI. We take them again one by one. First, grow digital. In 2021, we had committed to an average annual growth rate of 10% for our digital businesses, which consists of software, IoT, and digital services, and consulting services. We delivered. Our digital business grew by 12% and reached EUR 9.4 billion in 2025, including acquisitions. Now, we expect our growth to increase further, 15% on average per year, over the next five years. This means we expect this part of our business to double in revenue by 2030. How?
How do we grow in this area? Of course, software is a big part of this, and especially recurring revenue from software as a service. Take our successful SaaS business in Digital Industries. We grew the annual recurring revenue with an average growth rate of 13% year over year to now EUR 5.3 billion. All in all, for our SaaS business model in PLM, we won 24,000 customers. Seven out of 10 are new customers. Almost nine out of 10 are small and medium enterprises. For many of these smaller companies, this easier, faster access makes them choose Siemens software actually for the first time. There is Siemens Accelerator, our open digital business platform. It helps us reach small and medium-sized enterprises through our marketplace and, of course, with SaaS offerings. It helps us to sell more effectively into verticals and to tailor offerings through digital threads.
Here are five examples for how it is gaining market traction. First, manufacturing. Industrial Operations X. In one of their plants, Audi replaced physical controllers with virtual controllers from Siemens. The result: more flexibility, higher speed, lower cost. Audi will roll this out now to all their factories. Currently, we are evaluating with the virtual PLC with half a dozen further customers. Building X. We help to lower operations cost, which are the lion's share of buildings' cost. With data-driven optimization, customers can save up to 30% of energy and generate up to 10% more operating income. Signaling X, which is interlocking in the cloud. Instead of physical signs at the side of the track, we offer virtual signaling in the cloud. We have done this for Norway, for Finland, for Austria, for Barcelona.
Yesterday, we announced that this will be also working for mass transit in Singapore. It scales. Grid scale X. Many electricity grids are at their limits. Thanks to our software products, grid operators can increase their capacities up by 30% without upgrading existing hardware. The last example is Teamcenter X. We launched the digital reality viewer. What is that? Running in on Siemens Accelerator and powered by NVIDIA, Omniverse, and GPUs, it lets customers explore complex products photorealistic and in 3D to speed up collaboration. The next level will bring one unified, immersive, and highly realistic digital twin to factories. Foxconn, one of the largest contract manufacturers in the world, will be the first user.
Foxconn is building a state-of-the-art robotic facility for manufacturing NVIDIA AI infrastructure systems. With labor shortages and skills gaps, digitalization, robotics, and physical AI are more important than ever.
The factory is born digital in Omniverse. Foxconn engineers assemble their virtual factory in a Siemens digital twin solution developed on Omniverse technologies. Every system—mechanical, electrical, plumbing—is validated before construction. Siemens Plant Simulation runs design space exploration optimizations to identify ideal layout. When a bottleneck appears, engineers update the layout with changes managed by Siemens Teamcenter.
Which brings us to lever two: grow regions. Siemens, it's both a global and a local company at the same time. We are present almost everywhere on the planet. We grow where markets are growing and where markets grow particularly fast. We double down increasingly on our investments. The focus countries for us are the United States, China, and India. This broad footprint also increases our resilience. When tariffs or trade restrictions come up, we can buffer their impact for us. Most of our competitors cannot.
This supports our growth relative to the market. Here is the CAGR for our addressable markets over the next five years in these three regions: United States, about 6%; China, nearly 4%; India, more than 7%. These figures, by the way, exclude the Healthineers market. Here is now how Siemens fits into their respective growth stories. The United States wants to strengthen its critical infrastructure, reshore manufacturing, and keep boosting its AI capabilities. We invested nearly $1 billion in the United States in the last two years. This includes an expansion of our local footprint in manufacturing for electrical products. We are transforming public transport with the first high-speed link between Los Angeles and the Las Vegas area with locally manufactured trains. We are a partner for hyperscalers and their massive build-out of data centers. More on this in the deep dives later.
We are offering software for production optimization for the needs of small and medium-sized enterprises. It can enhance their shop floor performance by 30%. Let's move to China. China is moving up the value chain with high-tech manufacturing, building out its digital infrastructure, and the country wants to strengthen its position as a global leader in AI. We keep providing high-end automation in China, but we also started building value products for the local market: specified locally, manufactured globally, developed locally, and sold locally, and that with China's speed. In the last year, we have seen 18 new automation products, and we have more than 20 new products in the pipeline for the next year. We see great potential for Siemens Accelerator in the Chinese market: more than 500,000 registered users in China and over 400 offerings by now. India.
India wants to boost domestic and export-oriented manufacturing, and the country is rapidly building up their AI infrastructure and rail infrastructure across the whole country. Siemens is upgrading the country's transportation sector. Recently, we started full production of our locally manufactured electric locomotives. 1,200 are on order, including a 35-year full-service maintenance contract. This is a EUR 3 billion contract in total. We bought CNS Electric, a local manufacturer for low-voltage equipment. They have been growing with a CAGR of 20%. For medium voltage, we started manufacturing the environmentally friendly gas-insulated switchgear in India as well. This is, by the way, very much recognized. We were awarded Best Multinational Company of the Year in 2025. Yes, there are opportunities in Europe too. We continue to invest in Germany for its world-class industrial ecosystem, strong small and medium-sized companies, and outstanding talent and research.
We invested EUR 250 million to upgrade Europe's most modern train factory in Munich. We have started building our EUR 500 million technology campus in Erlangen, which will bring the industrial metaverse to life. Lever number three: grow verticals. Verticals are becoming more important for Siemens because our new fabric allows us to serve them even better. In verticals, and this is important, what we can do, since this is a smaller view on a market, we identify recurring customer problems and we resolve them in repeatable offerings. In other words, this is another great potential to scale. Here is the expected market CAGR for five verticals, growth verticals over the next five years. Rail transportation, 5%. Aerospace and defense, 9%. Life science, 9%. Semiconductors, 10%. Data centers and AI, 11%. Our target is to consistently grow faster than these respective markets.
A bit more on the five verticals I just mentioned. Let's start with data centers. Our revenue has increased to EUR 2.9 billion with a growth in 2025 of 40%. Our customers are building the next generation of data centers now through AI factories: larger, denser, higher energy intensity. Through this vertical, we bring everything we already have to offer. We are developing new offerings too, from advanced building management, automation with PLCs, DC switching for efficient power, and of course, a full digital twin simulation all the way from the chip to the buildings. Life science. Nine out of 12 top pharma companies rely on both Smart Infrastructure and Digital Industries offerings. We integrate what they typically need. With Dotmatics, we expand into software for their R&D processes. Rail transportation.
We are technology leaders in many areas, including rolling stock, signaling—you heard about it—and the cloud and AI-based predictive maintenance. Our ability to support with financing solutions is an additional advantage for us. In the rail transportation market, we expect to benefit also from government stimulus programs. We will take a deep dive on these three verticals in the afternoon. By the way, we have an exhibition there, which you might want to enjoy. We have some experts who love to show their products to you. Let me share a bit more on the following two: aerospace, defense, and semiconductors. In aerospace, we support our partners use fewer resources, and we help them to develop more sustainable aircraft. 95% of the world's aircraft engines are developed and manufactured with Siemens software. 90% of satellites in the orbit have been developed with Siemens software.
Defense budgets are growing globally with a CAGR of approximately 7% between 2025 and 2030. We have been a trusted technology partner for this industry for a very, very long time. Semiconductors. Globally, semiconductor companies plan to invest about $1 trillion through 2030 in new fabrication plants. Twenty-nine out of 30 semiconductor companies rely on Siemens technology. Two examples. Our automation and design software enables the production of 2-nanometer chips. We offer high-precision building technologies for clean rooms. Now, lever number four: grow AI. More specifically, we talk about industrial AI. This is not really new to Siemens. We have been developing AI-based tools and products for more than 50 years. Today, we have 1,500 AI experts all around the world. We use AI in three big ways: to boost innovation and productivity, to enhance our products, but we're also building our own new AI offerings.
Let's take them one by one. AI to boost our innovation speed and our productivity. We are using applications from Google for AI-powered improvement of our code, for example, for software-defined automation. This is really genuine code programming. The same tools help us dramatically speed up our bids for complex projects, train projects, for example. We can shorten tender application from weeks to hours. Secondly, powering our existing products with AI. Today, we have 38 AI offerings, and the number keeps growing. Two examples. AI that finds the best production path for machine tools. This will be possible thanks to our data alliance with the machine tool industry we talked about. We use Anthropic model Claude to refactor our own software. In simple terms, AI cleans up and simplifies code. This makes both our software and the hardware it connects faster and more performant.
Concrete benefits for our TIA Portal software: customers profit from updates faster and with higher quality. Third, we are building new AI products. Siemens is developing an industrial foundation model. With our domain know-how and with the vast industrial data we have, including those from our partners. This model will speak the language of engineers. It will ingest any kind of data—industrial data. We are working also on AI agents for industrial agents that plan, think, use tools, and cooperate with humans to achieve clear goals. We are doing this with our partner, AWS. Our award-winning Industrial Copilot is already used by a number of customers. It offers up to 30% higher productivity in factories, and we developed it together with Microsoft. For the AI opportunity, we've strengthened our team with Vasi Philomin . He joined us a few months back from AWS.
You will get to know him later in the breakouts. He is scaling an AI development center in Seattle, connected to our AI and domain experts all over the world. This is super important: bring domain know-how and AI and data together. In the next three years, we will invest more than EUR 1 billion in our AI capability and offerings. We will work even closer with our partners. Do not mix up EUR 1 billion with hundreds of billions in data centers. This is not investment in infrastructure. This is making this infrastructure work for the industrial AI. This is where this EUR 1 billion goes. Now, one example: NVIDIA. And Jensen Huang, their CEO, sent us this video message. Enjoy. It takes approximately three minutes.
Thank you, Roland and our Siemens friends, for the invitation to join you on your Capital Market Day.
Siemens is one of the world's great technology companies. Over 150 years ago, you ignited the first industrial revolution. Siemens Dynamo transformed motion into electricity, lighting up cities, powering machines, and electrifying the modern age. Today, Siemens builds the systems that power our industries and move our world. Once again, we stand at the beginning of a new industrial revolution: AI. AI is amazing technology. It will transform every application in every industry and introduce new ones. AI is also infrastructure. It demands a new kind of factory: factories that manufacture intelligence. Every company will use it. Every nation will build it. Now, every company will have two factories: one that produces things and one that produces the intelligence that drives them. AI factories is the infrastructure for the age of AI. Our partnership with Siemens spans every layer of this transformation. We are doing so much together.
Siemens helps us build NVIDIA products. Together, we help build for the world. NVIDIA engineers build Blackwell, the world's most advanced platform for accelerated computing and AI, with Siemens EDA software accelerated by CUDA-X. Blackwell is the computation engine of AI factories, and Siemens Smart Infrastructure is the power behind it. Over 100 GW of AI factories will be built before the end of the decade. These are new Siemens opportunities. We are transforming how engineers design, simulate, and validate everything they build. Siemens CAE tools, accelerated by NVIDIA CUDA-X and Physics NeMo, deliver massive speed-ups to fluid dynamics, structural mechanics, and electromagnetic simulations. What once took weeks now happens in minutes or even real time. With NVIDIA Omniverse libraries and Siemens tools, your customers can build interactive, comprehensive digital twins of products, production lines, and entire factories before the first machine is ever switched on.
Now we're bringing physical AI to the factory floor, inventing robotic factories that can think. Speaking of robots, someday there will be billions helping us in factories and at home. These robots will be made in Siemens-powered factories. This is yet another great new growth opportunity for Siemens born out of AI. The age of AI, the next industrial revolution has arrived. Siemens once again is leading the way. Dan Kischen.
A three-minute run through the technology stack, but also the market opportunities which we have. We are forging together with companies like NVIDIA and a very, very strong global ecosystem. We are in the pole position. Siemens is the leader in industrial AI for the real world. We have everything we need to build from here: the data, the domain know-how, the right people, the right partners. Of course, we do have the resources to invest.
Now, you know how Siemens will accelerate growth, profitable growth, with a highly synergistic portfolio and a new fabric, an operating system for speed and scale. As one tech company, Siemens can address new markets with new products, software, and AI-enabled offerings, and tap into an unmatched ecosystem of world-class partners. We have the gravitas to do that. At the same time, we benefit from our traditional strengths: trust, trust from our customers grown over decades, a global footprint, a great team, our management at Team Siemens around the world. Here are the key takeaways regarding our ambition: revenue growth up 6%-9%, picking up momentum over the next years, EPS pre-PPA high single-digit increase. New fabric, new markets, new products. Siemens has entered its next stage of growth. Now I'm happy to hand over to Ralf for more details about our financials. Thank you.
Thank you, Roland, and good morning, everyone. Thank you for joining us here in Munich and on the webcast for our Siemens ONE Tech Strategy and Results event. Roland has been elaborating on our vision for the future and how Siemens has been successfully transforming. I'm excited to add my CFO perspective now on these topics. First, let's look at our impressive results for the fourth quarter of fiscal 2025. Our top line showed strong contributions from both Digital Industries and Smart Infrastructure. In particular, the AI software business posted a record quarter that was supported by quite a number of large deals, as I saw broad-based volume growth from already high levels, including larger contract wins from data center and energy customers. Mobility's order and revenue growth faced tough comps, as you know, in the prior year quarter.
Overall, this resulted in a book-to-bill ratio of 1.02 and a high-quality order backlog of EUR 117 billion, as Roland mentioned before, providing visibility and supporting future value-generating growth. All regions have been contributing toward the 6% comparable revenue growth for the group. Most notably, Asia-Australia increased 8%, with China up 6% and India up 11%. The Americas and EMEA both grew 6%. Stringent execution converted into a sound industrial business profit of EUR 3.2 billion. As a result, the profit margin came in at 15.3%. This included material severance and M&A-related effects at Digital Industries, as previously announced and guided. Smart Infrastructure once again extended its proven track record of continuing margin improvement. Earnings per share before purchase price allocation accounting, our so-called EPS pre-PPA, reached EUR 2.51, excluding LTE and automatic effects, totaling a negative of EUR 0.21.
Since cash generation is the ultimate yardstick for any business's performance, I'm extremely proud of our EUR 5.3 billion of free cash flow, the highest level we ever recorded for a quarter. I applaud Team Siemens for this truly outstanding performance. Our dividend proposal of EUR 5.35 reflects our company's strength and our focus on providing an attractive shareholder return. Following our progressive dividend policy, this proposal represents an increase of EUR 0.15 based on our share price at just below EUR 230 at close of the fiscal year on September 30. The proposal equals an attractive dividend yield of 2.3%. As another important pillar for shareholder return, we will continue executing our successful and accelerated share buyback program, which has had an average price of EUR 198, with EUR 3.6 billion being bought back so far.
Looking ahead, we will flexibly react to market developments by leveraging our technological leadership, now expanded through the acquisitions of Altair and Dotmatics, of course. We will drive value-creating growth in fiscal 2026. I will come to our assumptions in a moment. First, however, let me walk you through the fourth quarter's result for our businesses. At EUR 5.5 billion, orders for Digital Industries were up substantially, both sequentially and over the prior year quarter. This led to a book-to-bill ratio of 1.1. In a continuously challenging market environment, the automation business grew 30% on easy comps, however, in the prior year and showed a clear uptick in orders sequentially. The AI software business exceeded our expectations and recorded an all-time high quarterly orders of above EUR 2.5 billion. Several large contracts in the product lifecycle management and electronic design automation businesses helped in setting this record.
Digital Industries' orders backlog rose to EUR 9.5 billion with a further increase in software share. Revenue for the DI increased 9% on a broad basis and reached the high end of our expectations. Therein, automation achieved 10% growth, led by discrete up 10% driven by the factory automation business. The software business grew by 8%, driven by PLM, up 11%, and EDA was up 3% on tough comps. On an operational level, the DI's margin benefited from already implemented capacity adjustments in automation, as well as from strong conversion in software. Driven by broad-based productivity gains, the DI's economic equation remained net positive, which is very important. The reported margin of 15.5% included material negative effects, as indicated previously. They had a magnitude of 440 basis points and were mainly related to the automation business.
Excluding Altair and Dotmatics, the AI's margin of 17.5% came in slightly above our own expectations. A clear highlight was the excellent free cash flow across all businesses, which expanded from an already high prior year level. Annual recurring revenue from the AI software business continued to show good momentum with a healthy growth rate of 10% on high comps. Our SaaS business is well on track, as evidenced by EUR 2.3 billion of cloud ARR. Excluding Altair and Dotmatics, the cloud ARR share was close to 50%. This outcome is clearly above our initial target of 40% by the end of fiscal 2025. All customer-related performance indicators continue to show a favorable trajectory too. Now, looking at the regional top-line perspective, the AI's automation businesses showed growth across the board.
Their growth rates reflect easy comps for orders, as well as support from typical seasonal tailwinds, as indicated previously. Germany and the U.S. drove sequential order improvement on a global level, while China was seasonally softer compared to Q3 of fiscal 2025. Overall, the automation market momentum remained subdued and behind initial recovery expectations, so no V-shape. Many indicators continue pointing to restrained investment activities in the near future. We expect this challenging market environment to persist into fiscal 2026. In contrast, the industrial software market clearly shows favorable dynamics on high levels, with AI remaining a key driver. However, difficult macro and regulatory aspects are causing uncertainty in this highly attractive market too. Against this backdrop, Siemens is continuing its transformation very successfully. The team is committed to turning groundwork into performance.
The automation business will continue to drive its adjustment measures, which have been making good progress. Having digested a huge portion of severance cost in fiscal 2025, we do expect a significantly lower amount of severance charges in fiscal 2026. We also expect further positive effects from severance to materially unfold from fiscal 2026 onwards. The software business will rigorously focus on completing the SaaS transition and on integrating Altair and Dotmatics to leverage market dynamics and synergetic effects. Integration efforts are expected to result in a negative impact of around 120 basis points for fiscal 2026 on the AI level. For Digital Industries, in total, we do expect comparable revenue growth in the range of 5%-10% in fiscal 2026. Growth across automation and software, as well as tailwinds from cost reduction and productivity measures, will support profitability at the AI.
We are again aiming for a net positive economic equation for the year, obviously. We expect the profit margin for fiscal 2026 to be in the range of 15%-19%. For the first quarter, we see comparable revenue growth in the upper half of our annual guidance range. We anticipate that the AI's profit margin will be slightly up over the prior year's level, reflecting ongoing severance cost and M&A-related effects. Now, Smart Infrastructure, once again impressed with flawless execution and extended its track record of operational margin improvement to 20 quarters in a row. Leveraging supportive market opportunities, orders increased 5% from an already high prior year level, with all businesses being up. Book-to-bill was just slightly below 1 and resulted in a strong backlog of EUR 18.6 billion.
Large orders materially recovered sequentially from a lower level in the third quarter, but remained below the extremely strong prior year's fourth quarter. Most of these orders again were related to data center customers. Revenue growth was broad-based and reached 9%, slightly above expectations growth. The strongest contributions once again came from the Electrification business. It was up 17% on stringent backlog execution, especially in Europe and in the US. In fiscal 2025, revenue in SI's data center business reached EUR 2.9 billion, up 40% for over the prior year level. The book-to-bill was clearly above 1. As a result, SI's data center exposure has been steadily growing and now amounts to around 15%, give or take, of revenue. We do intend to keep leveraging opportunities in this fast-growing market and anticipate revenue growth in the 10%-20% range for fiscal 2026.
Smart Infrastructure's stringent backlog execution also led to margin expansion of 120 basis points, ladies and gentlemen. The profit margin of 18.7% even topped our own expectations. Smart Infrastructure continued to benefit from economies of scale due to higher revenue and high capacity utilization. Its economic equation remained clearly net positive, supported by productivity gains and adequate pricing measures. Cash conversion was again excellent and led to a superb free cash flow above EUR 1.4 billion, only slightly below last year's all-time high level. In particular, effective working capital management fueled the seasonally strong free cash flow again. Let's turn to regional top-line development at SI. The U.S. stood out with strong performance in both orders and revenues. In this region, all businesses saw top-line growth, led by remarkable growth in Electrification on Data Centers wins. In contrast, China recorded declines in orders and revenue.
This decrease was due to a drop in the buildings business, given ongoing market weakness, especially in the sluggish real estate market. On a global basis, we do expect consistent market trends, with most verticals pointing to further growth opportunities. In particular, data centers and power utilities remain key growth drivers. Building on this strong technology and global footprint, we see SI geared for further profitable growth in the future. For the full fiscal year 2026, we expect Smart Infrastructure to achieve comparable revenue growth in the range of 6%-9%. Leveraging ongoing growth opportunities and a relentless focus on productivity, we anticipate that Smart Infrastructure will achieve a profit margin within the range of 18%-19%. For the first quarter, we expect SI's comparable revenue growth rate to be within the full-year guidance range.
Considering seasonal effects on exchange rate headwinds, we anticipate that the first quarter profit margin will be below SI's annual guidance range. Nevertheless, SI has the potential for another quarter of year-over-year margin expansion. Now let's move to Mobility. Mobility closed a strong fiscal 2025 on a positive note and with excellent free cash flow. At EUR 2.5 billion, orders remained below the strong prior year level due to a lower volume from large orders. However, going forward into fiscal 2026, the order pipeline looks very promising again. Mobility's order backlog stands at EUR 52 billion, and it has a very healthy gross margin improved over the prior year level. As indicated previously, revenue of EUR 3.2 billion developed flattish on tough comps. The rolling stock and customer services business came in below their strong level of the prior year quarter and outweighed growth in rail infrastructure.
The profit margin of 8.5% reflects a less favorable business mix compared to the prior year's fourth quarter. In terms of cash generation, Mobility followed through on its commitment and delivered an excellent EUR 1.4 billion of free cash flow in the fourth quarter. The strong year-end finish pushed fiscal 2025 free cash flow to more than EUR 1 billion. At a cash conversion rate of 0.93, this result is well in line with our one-minus growth target. As you know, Mobility has an attractive asset-light business model and has delivered consistently healthy cash flows and conversion for many years. Over the last 12 years, Mobility's growing top-line generated a cumulative EUR 10.2 billion of profit, which resulted in EUR 9.9 billion of free cash flow. With that, Siemens Mobility is a clear industry benchmark in terms of profitability and free cash flow conversion.
For fiscal 2026, we do assume that both comparable revenue growth and profit margin will be within the corridor of 8%-10%. For the first quarter, we anticipate revenue growth and margin within the same corridor. Now, as I mentioned, I could not be more proud of our EUR 5.3 billion of free cash flow all in for the Siemens Group. This was not only an all-time high for a quarter, but also pushed our fiscal 2025 free cash flow to a record of EUR 10.8 billion. This success is attributable to strength across the entire industrial business landscape, each of which delivered more than EUR 1 billion by themselves. A clear testament of the strength and dedication of the entire team Siemens. This record performance resulted in an outstanding cash return of 13.7%, and it marked the sixth consecutive year of double-digit free cash flow return on sales.
Continuing to build on this industry-leading track record remains our clear ambition. Now, let me use this opportunity to highlight the most relevant assumptions for our fiscal 2026 outlook. We do assume that the global economic environment will stabilize and that global GDP growth will remain near prior year level. As a percentage of revenue, we will maintain R&D and SG&A at similar levels as in fiscal 2025. These investments will help drive even stronger customer focus, faster innovations, and higher profitable growth. To further support momentum, we will also increase CapEx to optimize our global footprint and expand capacity in targeted growth fields. Severance costs are expected to be in the range of EUR 350 million-EUR 400 million, significantly below fiscal 2025. Up to half of the group's total 2026 severance expenses are expected to occur at Digital Industries.
We will continue working on ongoing capacity adjustments, of course, particularly in the automation business and on ensuring competitiveness across our entire business scope. Unfortunately, we have to expect exchange rate to be a strong burden for fiscal 2026. Based on current $ forward rates in the market, we see a negative translation impact of around 4% on our top line and 50 basis points on our industrial margin. We do expect this impact to convert into a headwind of around EUR 0.70-EUR 0.80 for EPS pre-PPA. Now, let me share our assumptions for the line items below industrial businesses. We expect governance costs to be net zero of brand fees, in line with the target we set to ourselves last capital market day back in 2021.
Innovation costs will be broadly comparable to the prior year level and will reflect investments related to our One Tech Company program, as outlined from Roland. Financing elimination and others depend on portfolio topics, of course, and we expect them to be roughly on the prior year level again. Finally, we assume a tax rate of 23%-27%. I have already described our fiscal 2026 assumptions for our industrial businesses. On the Siemens Group level, we expect 6%-8% comparable growth. We again anticipate a book-to-bill ratio above 1. We expect EPS pre-PPA in a range of EUR 10.40-EUR 11 in fiscal year 2026. This range reflects material negative impact from exchange rate, as mentioned before, and compares to a fiscal year 2025 amount of EUR 10.31, which includes effects from Altair and Dotmatics. As always, this outlook excludes burdens from real and regulatory matters.
In a nutshell, we are entering fiscal 2026 from a clear position of strength and with a very ambitious outlook. Now, let's move to the second part of my presentation for today. First, a review of and status update on the transformation that we have been driving successfully in recent years, and then a look ahead for our financial ambitions and priorities for the future. Let's start by looking back quickly at the substantial value Siemens has been creating in the five years since Roland took office as President and CEO of Siemens AG. Siemens is in excellent shape and has been transforming successfully. Our teams have maneuvered Siemens very well through a period really marked by volatility in markets and geopolitical challenges. All this resulted in a 151% total shareholder return since the beginning of fiscal 2021, clearly over and above industry-leading levels.
Today, Siemens is delivering faster growth and higher profitability at the same time. Our cash generation is stronger and more consistent than ever, and we have further strengthened our rock-solid balance sheet. We have allocated capital stringently to our shareholders while investing for profitable growth at the same time. Beyond that, we have been continuously optimizing our portfolio and have reduced complexity. At our capital market day back in 2021, we challenged ourselves. We set ambitious targets with an upgraded financial framework, and we delivered. For comparable growth and revenue, we had set out to achieve a compound annual growth rate, so-called CAGR, of 5%-7%, and we delivered 8%. For EPS, before purchase price allocation accounting, we reached a CAGR of 15%. At 16.2%, our average capital efficiency over the cycle stayed within our target band of 15%-20%.
As promised, our capital structure did not exceed 1.5 times. Another tremendous success was cash generation, where we accomplished free cash flow all in of EUR 46.7 billion throughout that cycle and have achieved also a very strong cash conversion rate of 1.20 since 2021. Finally, we announced that we would pursue a progressive dividend policy, and our dividend has grown at a CAGR of 9% since back then. Beyond executing on our group targets, we also drove our transformation. We delivered on strategic initiatives as promised. As I mentioned earlier, our SaaS transition is nearing completion, and we clearly exceeded our initial targets. Annual recurring revenue, or ARR, in DI software has grown 13% on average. The cloud share of ARR is now close to 50%. This result has been achieved well ahead of the initial schedule.
In addition, we simplified our structure by divesting portfolio companies that were no longer core activities. More on that in a few minutes. Year by year, we have been making progress towards an even leaner and more effective governance. We are achieving these improvements by consistently supporting our strong growth in operations with an adequate level of highly efficient resources in support and governance functions. In addition, we want the fees we receive for the use of the Siemens brand to fully offset our governance cost. Now, we can confirm that we expect to reach net zero governance cost in fiscal 2026 as promised. Team Siemens can point to an impressive achievement in recent years, and these successes also clearly show that we have further strengthened our excellent financial foundation. Our outstanding free cash flow generation, which is unique in our industry, is a crucial part of this rock-solid foundation.
I'm particularly proud that for six years in a row, we have achieved a double-digit free cash flow return on sales. Free cash flow is the ultimate yardstick for any business's performance, and it has been and will be a key enabler for our prudent capital allocation. On top, I'm very pleased to see that rating agencies recognize our strong cash generation and resilient business model. Our industry-leading credit ratings by Moody's and Standard & Poor's reflect their trust in this regard. Of course, we want our shareholders to participate in our financial strength. Between 2021 and 2025, we paid EUR 17 billion in dividends to our shareholders, and we delivered on our promise to pursue a progressive dividend policy. As I mentioned earlier, for fiscal 2025, we are proposing a dividend of EUR 0.0535. This will put our progressive dividend on a remarkable trajectory.
It has been growing at a CAGR of 9% since fiscal 2020, as mentioned before. We have also meaningfully accelerated our current five-year EUR 6 billion share buyback program. It has been running well, ahead of schedule, and at an attractive average price of EUR 198 so far. While providing these attractive shareholder returns, we have been simultaneously investing in future profitable growth. To expand on our position of technological leadership, we have maintained a peer-leading R&D ratio of 8% with expenditures of EUR 29 billion over the last five years. In addition, we have further strengthened our well-balanced global footprint by making targeted CapEx investments totaling EUR 12 billion. Finally, we have selectively expanded our portfolio by investing in inorganic growth. Over the last five years, we enhanced our portfolio with several bolt-on acquisitions and three larger acquisitions for a grand total of EUR 32 billion.
For years now, we have been simplifying our portfolio and sharpening its focus. By spinning off Siemens Energy, we created a unique and leading player in the energy market. Despite its bumpy start, Siemens Energy has become a poster child for crystallizing value. Its market cap is now five times higher than at the time of its listing in September 2020. Meanwhile, we have taken several steps towards phasing out our investment, as announced from the very beginning. This way, we have realized around EUR 3 billion in cash proceeds. We also materially strengthened our pension assets by contributing more than EUR 3 billion to our pension fund. Our stake in Siemens Energy currently stands at 10.1%. We remain committed to fully exiting Siemens Energy in a meaningful time frame and by being mindful of market conditions. In addition, we have successfully divested our former portfolio companies.
Implementing a private equity-style value creation approach proved to be very effective. We executed full potential plans and pursued strategic options. Over time and using tailor-made approaches, we found the best owners for each and every one of those companies. In total, the portfolio company divestments generated more than EUR 7 billion in enterprise value. Siemens Healthineers has been a separately listed company since its initial public offering in March 2028. The strategic rationale for that IPO was opening the business for new investors while preparing for a bold consolidation move. Healthineers made such a move a few years later by acquiring Varian Medical Systems, as you know. The integration of Varian has been going very well. We have now reached the perfect moment to take a major transformational step again.
As Roland outlined, deconsolidating Siemens Healthineers will align our portfolio even more closely with exciting growth drivers of automation, digitalization, electrification, sustainability, and AI. It is also time to shift gears as one tech company to go for the next level of performance. Roland already did explain the growth trajectory. We want to leverage opportunities from operating in attractive markets that have promising adjacencies. We will expand our share of digital businesses even further and faster. As a result, we are upgrading our revenue growth target to the range of 6%-9%. We continue to expect our EPS pre-PPA to grow faster than revenue. Increasing profitability in our industrial businesses over the next few years will drive this development. On top, we will maintain our high level of ambition for our other midterm targets according to our financial framework for the group.
I will go into the details for those metrics in a minute. Incremental growth and profitability in our industrial businesses are driving continued high single-digit growth in EPS pre-PPA. As part of our One Tech Company program, we are initiating steps to take our company to the next level of performance. In terms of our markets and portfolio, we are continuing to grow our digital business and grow in the most attractive regions and the most promising verticals, as Roland pointed out. These measures will structurally improve our growth and margin profiles. While our go-to-market can be distinct for different markets and business models, our teams will use one sales fabric. Standardizing and sharing information and tools will ultimately lead to better resource allocation. Our businesses will also benefit from one technology fabric. We will build technologies and services once and leverage them across the entire organization.
This approach will, for example, boost productivity in software development company-wide. On top, we are establishing one data fabric for all of Siemens. This step is crucial for driving advances in areas such as powerful AI usage. In the end, it will help to optimize our processes even further. All in all, we are building an efficient, optimal environment to enable our businesses to focus sharply and innovate faster. These levers will help in lifting our businesses more and more so that they can realize their full potential. At Digital Industries, our industry-leading and unique portfolios enable us to leverage opportunities in our markets and drive customer impact. In the AI software business, we are about to finalize our SaaS transition. As a result, we are expecting tailwind for growth and profitability going forward. The teams have created a stable, high-performing operating model.
Overall, profitability in this business will benefit from stringent integration of the recent Altair and Dotmatics acquisitions and continued productivity efforts. In the AI automation business, we are strengthening our sales teams by reducing back-office work and doubling the share of quota-carrying customer-facing salespeople. We will also further boost digitalization and vertical offerings. On top, we are rigorously executing ongoing productivity programs to drive margin expansion. You know, and they know, that I'm exceptionally proud of how the team at Siemens Infrastructure has delivered on their commitments since the last capital market day back in 2021. Not many believed in their ambitious targets back then. Yet, Smart Infrastructure proved what can be achieved with a good plan, intense dedication, and strong execution capabilities in an attractive market environment. SI's track record is speaking for itself.
The team has now achieved the 20th quarter of year-over-year operational expansion in a row, and SI's margin was north of 18% for fiscal 2025. Looking ahead, we expect Smart Infrastructure to continue to expand their margin. A year ago, at SI's capital market event in Zug in Switzerland, we outlined the strong market positions of SI businesses and their levers for further profitable growth. Those key levers are targeted capacity expansion to execute on the strong order backlog, intensifying expansion into high-growth regions and verticals, and driving growth of digital business and relentlessly improving productivity in operations on even higher levels than before. Now, as I mentioned earlier, Siemens Mobility is the industry benchmark when it comes to terms of profitability and cash conversion. Mobility achieved this performance level by prudently managing risks and opportunity time and again.
We are proud of how the whole Mobility team has been maintaining their enduring commitment to our customers to deliver our orders on time, at the right quality, and within budget. The teams will continue to work on increasingly shifting Mobility's business mix towards accretive profit pools in services, software, and platform businesses. Diligent capacity ramp-up and enhanced productivity will be key focal points for Mobility on top of maintaining the highest quality standards. Now, let me turn to the group perspective. I want to once again strongly emphasize our continuing commitment to profitable growth by rigorously implementing our ONE Tech Company program. We have achieved a very attractive trajectory for earnings growth in recent years. By pulling all levers I just discussed, we aim to continue this momentum and grow EPS pre-PPA by a high single-digit %.
In fiscal year 2025, EPS pre-PPA came in at EUR 10.71, excluding the effects from the Altair and Dotmatics acquisitions, which closed significantly earlier than originally expected. Including Altair and Dotmatics, EPS pre-PPA was EUR 10.31. For fiscal 2026, we expect EPS pre-PPA to be in the range of EUR 10.40-EUR 11.00, as I outlined earlier. We are extremely proud of continuously achieving double-digit free cash flow margins. This multi-year track record is the fact-based result of a cash mindset that is deeply embedded across the entire organization of Siemens and of maintaining a corresponding incentive system, of course. We are very confident that we are well-positioned to continue this strong streak. Excellent cash generation is a key pillar of our rock-solid balance sheet. However, there is more to it.
For example, an all-time low in pension provisions, as well as cash inflows from the recent sale of stakes in listed companies, and extremely important prudent capital allocation. It goes without saying that we aspire to maintain our rock-solid balance sheet and our industry-leading credit ratings. We know that return on capital employed is a key metric for our investors. It provides a clear picture of how efficiently we are using capital to generate profitable growth and create long-term value for our company's owners. As promised at our capital market day back in 2021, we entered our target range for return on capital employed back in 2023. Since then, we have maintained within the upper half of that range. We are committed to maintaining a ROSI between 15%-20%, even though we will face temporary headwinds for this metric from recent software acquisitions.
I mentioned earlier how we have been balancing very attractive shareholder returns with focused investment. We will continue to strike this balance effectively. We are very confident in the trajectory of the new fabric for Siemens as one tech company, and we want our shareholders to benefit from reliable and sustainable returns. We reiterate our commitment to an attractive shareholder return and a progressive dividend policy. We will stick to this policy even after deconsolidating Siemens Healthineers. To maintain our trajectory, and if necessary, we will temporarily allow a higher payout ratio. In addition, share buybacks will remain a core pillar of shareholder return for Siemens investors. Of course, on top, the intended spinoff of 30% of Siemens Healthineers shares will benefit our shareholders directly and materially. Roland outlined the significant growth opportunities that we see in our markets.
You will hear more about them in our deep dive sessions this afternoon. To leverage these opportunities, we will continue to invest. We will maintain high R&D intensity to continue driving our technological leadership and further growth. Our geographic footprint is well-balanced, and we will continue to optimize it through targeted capital expenditure. In addition, we will harvest selectively, invest selectively in value-creating acquisitions. All investment decisions will be based on our well-known and clearly defined strategic imperatives and on prudent decision-making. Certainly, we will continue to monitor each M&A transaction closely based on specific criteria. Our aim is to ensure attractive returns and ultimately strong value generation. Ladies and gentlemen, our markets are changing at a high pace, and Siemens is transforming rapidly to stay in the lead. Yet, our principles for value creation remain the same and remain fully intact.
You can rely on stringent capital allocation and strong cash generation to drive operational performance at Siemens. You can rely on Siemens continuing to deliver very attractive and sustainable shareholder returns. Along the way, we will ensure that rigorous execution, transparency, and compliance remain paramount. Roland and I, the Managing Board, and the entire team Siemens are all fully committed to further accelerating value creation as one tech company, Siemens. Thank you.
Thank you, Ralf. Thank you, Roland, for opening the day. Welcome, everyone, also from my side. I'm Chris Ribeiro, the Chief Communications Officer of Siemens, and I'm here with Tobias, the Head of Investor Relations. Together, we will guide you through the day.
Thank you, Chris. Also, good morning from my side.
I'm really happy to see so many of you taking place here in person, but also a warm welcome to the ones joining us live via the webcast.
We have a packed agenda. You received the agenda before, and you can see on the screen. We have deep dives with our experts. We have hands-on experiences showcased on that corner, network and exchange with MBMs and experts. What is next, Tobias?
Next is a break. I think we all deserved it. We will be back in 10 minutes for the Q&A with Roland and Ralf.
See you in 10. Bye.
It seems that our coffee machines are working slowly, but don't blame us, it's not our business anymore.
Welcome back for the Q&A with Roland and Ralf. Let me start with a few housekeeping items. If you have a question, please raise your hand.
To ensure that we hear you clearly, we ask that you use the microphone placed on the table in front of you. Please turn it on when asking your question. To give as many people as possible the opportunity to participate, please limit yourselves to two questions. Chris and I will moderate and take questions from both journalists and analysts. We would start with the first questions from the analysts. First question, James Moore, first row.
Thank you, Tobias. It's James Moore from Rothschild & Co. Morning. Thanks for all the information and Healthineers and the great growth outlook. I guess my question is about profitability, and in particular DI.
If we're going to do high single-digit growth at the group level, I know you talked about the ambition of earnings above that, but if we're high single-digit growth for earnings, there's not a lot in there for margin expansion over time, and normally record growth would drive some operational gearing. Specifically in DI, I imagine you should have some tail-of-the-fish benefits, some productivity, some of the benefits from severance, and a positive economic equation. I just wondered if you could help us with what's on the negative side of the ledger, apart from currency, which you've been clear on. In particular, does the $2 billion of AI investment, sorry, the $1 billion of AI investment, whatever the number is, does that have an impact on the P&L?
Thank you, James, for giving me an opportunity to clarify a bit.
I know that some of you may consider the guidance for DI margin conservative. I would rather qualify it as prudent. We clearly said and also experienced that part of the market is not yet bouncing back V-shape-like to investment sentiments. Therefore, we do expect on top of exchange rate and also on top of the extraordinary integration that we mentioned and severance, which will be pretty much 50% of that would be guided for the entire company for fiscal 2026. On top of that, we'll see quite a couple of challenges developing through the first couple of months in the market. We do see momentum there. They are doing their homework, but also please bear in mind that severance being booked does not implicitly mean that all the impact is immediately popping up. That will take time to materialize.
We want the company to stand on firm ground and also learn from history. Therefore, I would call it prudent and not conservative.
Let me talk about the AI investment. This is basically an investment which goes across the company, but there is an increment of EUR 100 million, EUR 100 million plus, which you will find in the innovation below IB in that part. This is particular for the team which was a filament. You will get to know him later. It is about to build up. This is only part of that. Other parts are, as you know, as I talked about, we have 1,500 AI experts across the company. We have many AI projects also in the businesses, but that is not increment. This is part of the R&D budget.
A big question now from the press side. I saw Michael Fleming.
Question from the press side. Any hands? Please.
Okay, great. I have two questions, please. I did not raise my hand, but nevertheless, I will take the chance. You are a volunteer. You are volunteered. What complications do you have on the regulatory side for the deconsolidation of Healthineers? And the second one, the share price today is 5% down. How do we interpret this reaction? Thank you.
Yeah, thank you for your questions, Michael. Of course, too early to finally conclude on the share price development of today, but what I feel also from the responses and that what we get as feedback, we made you drinking from a fire hose. Many different aspects, levers floating around, and we are happy to have now an opportunity to clarify areas that may not have been coming across completely clearly. That is why we have a Q&A.
I firmly believe that what we have to share today will have a very positive impact on the long-term value development of both Siemens AG and Siemens Healthineers shares, and also prospering opportunities from capital allocation in both companies. They are both leading in their markets, and I cannot imagine anything that could hold them back from being successful, even more than they have been so far. Too early to jump to conclusions, but it's not a surprise that there's a lot of volatility at the moment out there. As I said, since there's room and, of course, also reason for further clarification and details. Your first question, maybe one of them that needs further details. I hope we didn't get across like there's regulatory problems or challenges. It's just respect for regulatory processes.
I think everyone is well advised when you do something for the first time that you respectfully look at those who have a say in the process. Therefore, I would rather consider that being a topic of timelines than content, but too early to assess that. It is in their field and respectfully wait for them. If and when regulatory processes are getting us a clarification fast, we will be fast. If it takes a while, we will have to wait. We will then be very well prepared for the next steps to be taken.
Next question from Ben Uglow.
I think Michael wanted to add something. Sorry.
I am sorry. I choose the word problem because maybe on the tech side, you may have problems.
Yeah, as I said, I mean, we are standing on very firm grounds with our view on matters, but still there is a regulatory aspect in it that needs to be considered, and we respectfully address that. We are talking to the regulators that are relevant for these steps. We feel encouraged by all the means and initiatives we took before that, that we are on the right path, but that does not take away the decision power from the regulatory framework. Therefore, we are confident that there are no problems, but there are timelines and opinion-making required on the regulatory side. If we were not convinced of our view, we would never dare to show up with a proposal.
Now it's Ben's time.
Next question from Alexander Reuters.
Ben Uglow was on. Yeah.
Oh, it's fine.
Chris, take Ben first. Ben.
Yeah, just push.
Switch the microphone. There we go.
I guess it's related to the previous question, but we're all frankly in the dark about exactly what the tax situation is and the regulatory implication. I know I understand these are probably sensitive conversations, etc., but Ralf, can you give us just a little bit more sense on what the tax obligations or considerations are? The reason why I ask is, from a Siemens AG standpoint, our understanding was that had basically gone away. What we're really talking about is, from a receiving shareholder standpoint, what their withholding tax or commitment is going to be. Is that right? The second question is far more fun. A year ago, I think it was, when we had the Handelsblatt article and various comments about this conversation.
At that point, I think that there was a, how core is Siemens Healthineers to Siemens? We were going to do an internal review, look at the synergies and all these kinds of things. There was obviously debate within the company. It now looks as though a decision has been made. What allowed you to come to a firm final decision? What changed in the water? What put you over the edge, so to speak, that allowed you to do this?
Okay, let me start with the tax one first. I mean, there are, of course, tax implications in many different areas. For Siemens AG as a company and its tax obligations, I think we are fine. There is an immaterial amount compared to the potential deconsolidation gain involved. We did not want to bother you with that. It would be too early to quantify anyhow.
Not on the Siemens AG side. Therefore, it's difficult for us to talk about withholding tax because we are not the addressee of withholding tax. It's the depot holding banks for shareholders. That very much depends on the nationality or jurisdiction, residency of the individual being involved, the magnitude of the investment being involved, whether it's held privately or in a business environment. Therefore, we cannot jump to conclusions for the shareholder because there's not the shareholder. Withholding tax is, of course, the area we are talking. Since we are not owning the process, it's hard to comment. We are very confident that we thought about all the relevant aspects, but it's still not our turf to decide on. Therefore, we respectfully have to wait. Maybe this is also giving me a bit of an opportunity.
I mean, the timelines are not written by ourselves, obviously. You have to respectfully wait for conclusions being made in that field. There is also, of course, the question out from that, what I heard, where do we start from and where do we want to end up with? For those who are familiar with the financial and accounting language, a financial investment is considered to be below 20% typically. There are other aspects that need to be considered. If that is the midterm goal, you probably need to know where we start from. At the moment, we hold 67% in Siemens Healthineers. You also heard us talking about funding our software acquisitions, our latest software acquisitions with the sell down of listed shares, both Siemens Energy and Siemens Healthineers. We did not specify.
If you took for modeling an area of something around 60%, sell down to 60% from the 67% being a residual from that, what we wanted to do in funding, maybe a bit below this is probably a meaningful area to think about. Starting point is 67%, but there is intent and processes that have been ongoing to do what we said clearly last year when we announced that funding for the software acquisitions would in part be done by using the proceeds of selling listed shares.
Thank you for that question. I give you really more details. What I'm saying now is not in the sequence of priorities, but it's basically describing the whole process, how we get to the decision. Let me first start. We always said we are not dogmatic about it.
We also said that since the acquisition of Varian, we have a bottom line impact of $350 million, and we want to see how that materializes. By the way, it did. Obviously, we discussed all options, all possible options, because we need to be diligent in such a big decision so we do not oversee anything because this is a one-way street once you go there. We are working, for example, also on the point. The question is, how strong can we develop together the whole healthcare sector? It is not only in the headquarter to think about, it is really on the field. I mean, I started together with a team locally in the United States, also together with a consulting company to see, can we together create a stronger impact? We visited hospital customers and to see there.
By the way, the teams are working also on the ground together to see, can we really leverage each other's strengths? I was saying in the basement, where you find the scanners, and in the ground floor and uppers, where we have the beds and all the other productivity, and can we do something, including sustainability? Yes, we can. This is also good. It is a roughly EUR 1 billion business of ours, just one. Again, it is not that synergetic that you say that you can really drive much, much, much, much higher growth, but it is still good. We really took a deep dive in what does digitalization mean in our sectors, in the industrial sector, infrastructure, transport versus the healthcare sector. When I talk healthcare sector, and this is another element, increasingly clinic-driven healthcare sector.
If you look at Siemens Healthineers' strategy, where they go, it's going more into therapies along with diagnostics, which is really the clinical part. You see all the regulations. I mean, hospital systems, for example, they don't scale across regions. Digitalization is different from that perspective. We looked into what is our capital requirement in the future. What is that one of Healthineers? A very important aspect, which you have to take into consideration. What are the fundamentals in the markets regarding growth, growth trajectory, where we can do a regional as well? Again, reevaluating how synergetic are the businesses with each other? At the same time, and this is a very important point, our Siemens business really developed further in terms of growth, in terms of profitability. The way how much of obviously cash we are generating on our own.
If you take that all together, you come to a point that once we go that step, we have a much, much stronger freedom regarding capital allocation on both ends. We could not justify a synergetic case which is as big as in order to really keep going and really leverage. The final thought, we thought we are better off in making that step.
If I may add one thing just quickly, I mean, if you look back, that's why we took the time to remind ourselves where we are coming from central and took over. I think it's fair to say that the company has been already changing its fabric massively. It's not finger-pointing to the past or complaining about missed opportunities. It's about just keeping the momentum of that what we have been embarking on.
We are a company that is scaling on digitalization, electrification, automation, sustainability with a focus on AI that is scaling globally. The healthcare industries are globally fragmented. They are ruled and regulated in different jurisdictions. If and when they scale, it's a different ballgame. The entire sector, and don't get me wrong, Healthineers is a fantastic business, and they are clear market leaders in most of their areas anyhow. Technology clearly wise and also growth-wise and from a profit-generating perspective. The entire sector will most likely not grow double-digit anytime soon. We can and prove that we can do that already by now in some areas. Therefore, capital allocation needs to be focused into those relevant growth areas and why harming others with our opportunities. That's a big, big difference compared to the status we had when we listed Siemens Healthineers in March 2018.
That was a different shape of Siemens AG. Therefore, it's only consistent that you time and again review your portfolio, your perspectives, your capital allocations, and then conclude at the right point in time to do the right thing and then consistently and as quickly as possible.
The next question from Alexander from Reuters.
Thank you very much. I want to follow up on this a little bit regarding your targets for the next few years. When you take out the Siemens Healthineers' projected or past growth rates, the 6%-9% don't seem too ambitious. I think that's what the market also thinks today. This is not really excluding Siemens Healthineers. This is not very much more than in the last few years. Can you comment on that? How ambitious would you say is your target?
On the other hand, Siemens Healthineers has had quite a big chunk of your sales and profits in the last few years. How do you think Siemens, or do you think Siemens can compensate this within the next few years? Or will there be a Siemens in the end that may prove to be too small and become a takeover target? Thank you.
Let me start at the end. I do not think so. We are still a sizeable company. This does not cause sleepless nights. Let me start with your, I tend to disagree that 6%-9% growth rate going forward is a weak target. I would consider it to be a very strong number, one. Think where we are coming from. I talked about it in the last sequence. We had 5%-7% ago, now from 6%-9%. Number one.
Number two, did it double-check for the GDP growth in whatever the world, how that goes? Even our markets are on the high side. I talked about our markets growing 6%. They grow only by 6% because we have a substantial part of high, fast-growing digital business in there. Remember the 175 by 2030? This grows by 11%. How many companies can claim to play in such a fast-growing market substantially in revenue? Talk about $9.4 billion revenue. All in all, if you agree that if you come to that conclusion, then talk about the investment, it is hold back still. China, by the way, is gradually picking up. This is not a V recovery in the market. It is gradually picking up. We are picking up momentum with that market too.
I tend to disagree that a midterm growth of 6.9% picking up momentum is, we believe, a very strong target. We have to see what others can do in that space. I believe this is really good.
On top, of course, converting top line into results is not a bad thing either. We are clearly committed to outgrowing EPS, the top line growth, which is quite something to accomplish time and again. One more thing, since you mentioned it, we are, for some businesses, we could grow faster. We are throttling, for example, in more dilutive solution business. That is where we say we could go faster, but we keep that on a certain level. That is another element where we really believe that happens, for example, in pieces of our building business and pieces of the AI business as well.
The other part of your question, Alexander, was around closing a potential gap being left behind Siemens Healthineers once being deconsolidated. I do not want to get into accounting things here, but it is a big difference between fully consolidating, amongst others, profit and cash flow, and owning the proceeds. Because we do own already by now the dividend, we consolidate the free cash flow. It is a big, big difference whether you own something or whether you have something in your area of responsibility from an accounting perspective and an oversight perspective. Do not misinterpret that big difference that is there already. If and when, as we did, we sell down, we came to 67%. That gap already has been widening compared to the 85% we originally owned. Did you see any negative development in the KPIs of Siemens consolidated or not? I did not see that.
Therefore, we are confident that we can continue on that trajectory and do meaningful things in a well-balanced way between investing and shareholder returns. The second thing is we made a clear commitment, and I had that in my presentation and speech, that we will continue committing ourselves to progressive dividend. That means we are, if need be, also ready to increase for an interim period the payout ratio. That statement is based on a very deliberate approach and well-thought-through planning. We are highly confident that we can close that gap if it occurs over a meaningful period of time. As I said before, we are not owning the timelines of deconsolidation. Therefore, we do not want to speculate about that.
If and when it comes to that point that the spin is executed and deconsolidation is taking place, we also will have the benefit of a deconsolidation gain most likely. We cannot speculate about that today because it is driven by many different factors, amongst one is very important. That is the share price at that point in time. You can rest assured, as much as the consolidation gain is higher than tax burden by far, it also may exceed a gap in a given year if and when that deconsolidation is taking place from an operating perspective. I cannot give you more confidence of the managing board that we are fully aware of that question.
Next question from Phil Bala.
Yeah. Hi. Thank you. The first question is a follow-up on the Healthineers' comments that you have made.
Is it possible that you could potentially deconsolidate pre the spin via dribble-outs and blocks? They've been taking place in recent months anyway. Could they potentially still be accelerated prior to the spin-out? That's question one. In terms of M&A, it sounds as though potentially large things are going to happen. What is missing when you talk about the fabric? What's missing from the fabric today that you think is important going forward? When would we anticipate deals? Thanks.
Let me take the first part of your question, Phil. I don't want to speculate about the timelines and things, but it's highly unlikely that a deconsolidation would take place before the spin of the 30%. You never say never, but it's highly unlikely. As I said before, we are busily looking into the regulatory framework and opportunities arising from that.
The entire process, of course, will not be done within a couple of weeks. We are also mindfully looking at the share price of Healthineers, of course. Therefore, we are not in a hurry of doing anything premature and harming the value of that really outstanding company.
There is not really a big piece missing currently, but I can tell you in which areas we are looking. Number one, and that is quite obvious, we are looking to any kind of software assets in the market. Take, for example, our market expansion, which we did with Dotmatics. It opened us a new space in the R&D of pharmaceuticals, so simulating molecules, creating the twins there. There is a space which is super dynamic, super interesting. Any kind of asset which enriches our portfolio there is super interesting.
We also talk about connected hardware devices, which are generating data on the shop floor. Any kind of device, we have a chance to increase. We are looking into that one. I mean, you know that the new AI factories require new technologies such as solid-state transformers, DC switching. We have, in all cases, what I'm talking about, organic investment as well, but there might be inorganic moves, smaller ones, maybe larger ones. We have the firepower to do that, but it has to make, obviously, economic sense and align with our strategic priorities. Therefore, in the AI space in particular, we are watching closely also the startup of smaller companies. I mean, in some cases, they are just, I mean, their market expectations or their value is so high that it's prohibitive. Still, in an early space, you find a lot of interesting companies, which is interesting.
It's interesting from two perspectives. What's the offering and what is the talent which comes along with that? Typically, we would stick to our trajectory, which we had in the past. We are adding incremental medium-small-sized assets to our software portfolio. We're looking into hardware, but we also do larger moves, as you know, like Altair and Dotmatics, if it really fits to our portfolio.
Any questions from the media side? Please.
Hello. Filippo Santelli from La Repubblica, an Italian newspaper. I have two questions. The first one is on your slightly optimistic outlook for the geopolitical scenario. We've seen the U.S. and China go through phases of escalation. The escalation, it looks like we're in the escalation phase right now. Most experts think that in the medium-long term, the two countries are headed towards a technological decoupling.
What makes you confident that Siemens will stay in a position where it can provide key technological capabilities both to the U.S. and China in strategic sectors, thinking about semiconductors or aerospace or energy or whatever? The second one is on Europe, and its industrial and technological competitiveness. It is obviously very high in the agenda. Do you think in concrete terms Europe and European countries are taking the right actions to boost the industrial competitiveness, both on the regulatory side and on the investment side? Thank you.
You trigger something here. I said you trigger something.
Talk about the markets. Number one, the markets themselves, I said it before, number one is we are sitting on. We are serving growth markets, secular growth markets.
There's not a really one-to-one match between the GDP growth and the market growth because, as I said before, we are focusing on the higher growth areas: automation, digitalization, sustainability, and AI. If it comes to technologies, I would say it's getting harder that you have a technology in a certain space, in a certain space, which you scale globally. This is the reason why we are more and more going for local development and not only applications based on a global platform, but genuine local development. Take an example of China. The products which we talked about, the new ones, they have all the way local Chinese components down to the silicon. This is not the high-end 53 nanometers silicon. You find a lot of that, by the way, is produced in China. The older nodes, the market share coming from China is extremely high.
We do that also because we know there are regulations coming in which are forcing you to use also only China silicon on your controls. We do that. We are prepared to do that. We go here all in. At the same time, we do that on the other side. If we talk about innovation, software-defined automation for global market in the United States, this is more based on resources, but also on components coming from there. There is one area, obviously, which is more critical, which is software, because software you want to develop once and sell it as much as you can globally. The only restrictions which we see so far, and you could read it also in newspapers, is EDA software. Therein, it is not the whole EDA package.
It's the package which is geared for the smaller nodes, so 53 nanometers, which there's a restriction. It was resolved quickly after, and this is the arm wrestling. This is technology on the one side and rare earth material on the other side, and it was resolved after three weeks. Would that go away? I don't know. This is the point where you also start thinking of, can we, let's say, fork some of the software platforms as well? If need to, we would. Currently, the majority of that, what we are doing there, we believe we can still serve in different areas. You're right. The focus is definitely semiconductors and, to some extent, dual use, the sole aerospace and defense sector. Yeah, we need the answer to be competitive in the future, also to have our industry staying competitive in the future.
The answer is speed and agility in innovation. Germany, in particular, we do not have resources. Our resources are the people. Our resources are innovation, innovation which is so good that others want to buy it. We are an export country. Innovation based on ecosystems, super strong companies, and still automotive. I count on them, but also the supply chain. They need to do actually also what we do is digitalizing all their processes, work more with digital twins, and more work with data. Along with data comes, of course, the whole cybersecurity. Go all in with AI. I mean, I strongly believe and subscribe to what Jensen said. This is a general-purpose technology. There is a world before electricity and after. It was a general-purpose technology. Think about it. There is a world before and after AI. The world will use it.
If we start, and if you look at the regulations which we have currently in Europe: AI Act, Data Act, Cybersecurity Act. This is contradicting. It's too much. It's throttling innovation. Why would you derive a regulation which is supposed to protect end consumers? Why would you deploy the same mechanism to B2P business? We are writing contracts. We are taking care about our products. Is there a need for regulation? Don't get me wrong, but this should be guardrails which ensure that within these guardrails, you can go all in with your innovation speed. This is not only about regulations, but also about decision-making. We are in a time where we need more and faster free trade agreements, and we cannot wait for 10 years when China is doing that in one or two. We need less bureaucracy.
We need faster digitalization also of these processes. Just pick one example. If you want to attract talents, you better get your visa process right, that you get these guys and they do not have to wait for six months. Otherwise, they are somewhere else. I can go on. I believe we have really a substantial way to really sort out complexity and innovation, throttling governance and regulations in Europe and Germany in order not to lose competitiveness on a global scale. I tell you, neither China nor the United States is waiting for us.
Next question comes from Daniela.
Thank you very much. I have two questions, both of them related to digital industries, but I will ask them one at a time. First, on software, Ralf, you have mentioned that the headwinds from the SaaS transition were mostly behind us.
Can you comment on sort of now the potential tailwinds on growth and margin based on what we've seen as headwinds? Can we start counting on those in 2026? I'll ask the other after.
Want to ask two questions at the same time?
You want me to ask now? I was going to wait. Okay. I'll give you time.
I mean, first of all, you're right. We are, I would say, 80% done with the SaaS transition, not completely, as we mentioned before. Of course, we are seeing positive impact from that. Yeah? We still also have a business that has not been heavily affected from SaaS transition. Thank God EDA is working very well too. It still is and will remain a chunky business. The seasonality and the resilience that we aspire with the SaaS transition is not fully affecting the entire portfolio.
We discuss that quite frequently. We also have been acquiring two highly attractive companies that are on the path to be integrated. I indicated in my presentation that there will be 120 basis points, give or take, margin impact from integration efforts. There's people-related things. There's a bit of adjustment here and there. No one can expect this being done in three or four months, obviously. That is going to have an impact. There is also a clear opportunity to get into scaling mode on that one. We feel highly encouraged by the results we achieved so far. We discussed the cloud-based ARR ratio being very close to 50%. Original plan was 40% by the end of 2025. We are ahead. Roland has been elaborating on the customer-specific access we have with small and medium companies.
The entire rationale of the SaaS transition is bearing fruit now and will be harvested. I know that you, or at least some participants, would love to hear us talking about software margin already by now. We are not yet at that point, but you can rest assured that we aspire and continue aspiring and are on a good trajectory to be one of the margin leaders in the years to come as well. There are a couple of specifics for those which are not that deep into the detail. Many of the software companies are listed, have shares to pay with their key personnel. This will not be one by one translated into the Siemens approach. That is why I have been inviting many of you, contributing to getting us to a point to having meaningful metrics once we start talking about them.
That metrics should not add another non-GAAP figure to the hundreds of non-GAAP figures floating around already in that field. I will still be happy to listen to every meaningful proposal in that field. We are committed to make this a success, as you know, and to also share relevant metrics at that point in time when we feel we are mature for it and you can work with that then meaningfully. One last comment, if you allow, you can rest assured that Roland and myself are at least as ambitious as you guys are when it comes to profitability development at our software business.
Thank you. The other part is regarding the automation part. You've commented some years ago on sort of the challenging competitive environment in China. You then adjusted your offer towards that.
Can you give us a little bit of a view right now? Sort of have you started to see market share going back up? Should we foresee margins in China in automation could also go up?
To the later one, yes, because the Chinese market is still under the potential which we have there and which we see there. This is a general remark regarding our automation business funds. Secondly, we see also a pickup not only in the, if you talk about the value for money market, this is where we launch our new products, but also in the other segments, higher segments, market is picking up, in particular in the factory automation space. Machine building is still held back a little bit, but there we are picking up momentum. We see traction in the market of our new products which we launched.
There's a reason why, and I said before, this is now an engine which we started. We are about to launch 20 new ones. For example, IOs are reworked, and they would even go global. This is a really super strong platform. Once we do that, it's new products and new products with a cost out, which allows us also to drive our margins at the same time. We are very careful about maintaining our margin. There's still in the very high end, there's higher money to earn on that one. Do not underestimate, if you do it right from the specification to the sourcing to the manufacturing, then you can also drive your margins in that business going forward. It is a volume game, though. Therefore, we have to get traction and we have to sell more of those in the market.
The last point is that it's a different sales motion too. We are learning that. This value for money addresses different customers, some customers which we didn't talk to yet. So we have reached them also with our digital platform. We talked about super relevant, but you still also need to have some feet on the street. There's a reason why we're happy that we have more. We double our quota carrying people globally for the automation, but in particular in China. Therefore, it's a combination of having the right products and also gearing our market, go-to-market for eventually new customer market segments. We are very confident that we are picking up momentum there.
Question from the media comes from Angela Meyer.
Thank you very much. Two very short questions. First, on your software business, could you maybe quantify the software margin, the margin of your software business?
I think there has been some speculation about it. Is it fair to assume that your software margin is dilutive to the Digital Industries' margin? Second question, just to clarify, your growth target of 6%-9%, does this include any acquisitions? Thank you.
Thank you for the question. I think I answered your first question already by commenting on what has been asked before. If we had the intent to share software margin at this point in time, we would have done it. I said also the reasoning for that. We are in the process of completing a very successful SaaS transition. We always said when we started to enter into the transition to SaaS that we will consider sharing metrics after completing the SaaS transition. Being not there, we stick to what we said.
The second part of that question was implicitly answered with that as well, because if we talked about the margin levels and the impact on the DI margin and all, we would do exactly that, what we do not do at the moment, share something premature. I think there's nothing to add.
Regarding our midterm growth target, 6%-9%, this is without Siemens Healthineers, and is it without M&A?
I see hands in the second row. John?
Thank you. It's Jonathan Mounsey from BNP Paribas. First question, obviously you've committed today to take Healthineers down to financial asset status, which you also then elaborated was 20% or less. When you exited energy, I think you already at the beginning made the commitment to a full exit. Why not today make that commitment for Siemens Healthineers?
The second question, just thinking out, I would suggest that the day after you deconsolidate Healthineers, you're going to start getting questions about the rest of the portfolio. Mobility is doing very well. We know that. Healthineers is a good business. Energy is a good business. You exited those. Can you give the sort of synergistic reasons why mobility maybe fits within the portfolio?
Let me take the first part of your question, John. I think it's important. First of all, I do not think that we should and can compare the energy listing and exiting to the Healthineers listing and exiting. It was completely different rationale. I don't want to repeat all that, what you know anyhow. Therefore, taking a relevant step at the right point in time, I believe, is a good thing to do.
At the moment, we are busily preparing for those crucial steps that it will take to get that spin done. Being a financial investor, in the meaning of the word, means being a financial investor then. And a financial investor, as also many of your clients are, would take prudent decisions then on whether to hold or not an asset at a certain point in time. We are not at that point yet. Therefore, we do not want to jump to premature conclusions. Maybe you consider that playing with words as the relevant piece, financial assets are financial assets.
Mobility is a completely different situation. Let me start with the technology. Currently, I think it is fair to say that Siemens Mobility is playing the technological leadership, regardless whether you talk trains, the efficiency of our trains, talk about our recent win at SBB.
It was not won by the price. It was won definitely by the technology. What do we do? Efficiency, maintenance cost, service cost, technology, what do we do? Predictive maintenance, all that sits on solid Siemens technologies. The signal in the cloud was development not possible without the technology which we talk about in our technology fabric, cybersecurity, the cloud, machine learning core, which drives the predictive maintenance of our trains. We are saving one train of our opera or two trains in some cases in the fleet because we have an uptime. All that is based on the products which we do together with technology which we're scaling across the company. Mobility in particular loses it, including also controls, for example. It goes further. We are genuinely working on a genuine new product development.
If you get a tender, that AI gives you an idea how the train looks like, which you should offer based on all the manufactured trains we did in the past. AI can learn it and train it. This is a next level, and this is technology which we bring to the party and make out of Siemens Mobility technology that what it is today, which is a clear margin leading. Wait for our new novo trains once they hit the market, how they look like. I go along that supply chain management. I mean, it's commodities. It's steel, green steel, aluminum, green aluminum. This is a super leverage what we do there to make, and the customers are asking for that. We need to also offer that without having a super impact on our cost. The same holds true for hardware and the like.
The global footprint which we support, financing, super relevant. I mean, in very many cases, we have a very good combination. It goes to business energies. I mean, I will talk a little bit later in my intro for the breakouts about one example, Paris Metro Line, where we are jointly working on a system. Siemens Smart Infrastructure comes in electrification. They come in with building technology for the surveillance part, any stations, tunnels, controls. Therefore, this is a lot where we can do together. You do not see that because it works in very many cases in projects where we are systemic. Egypt, it is a bigger one. Therefore, and last but not least, they are paying very well, not only into our business and cash flow, but also into our sustainability agenda. We are really making a big difference there.
They are eligible to 100% aligned with 80%. This is where we are talking about a synergetic portfolio for industry, infrastructure, and transport, which is the core of our Siemens portfolio.
Looking at the time, we have time for one last question. Martin, you want to close it off?
Yes, thank you. I just want to come back to the outlook for profitability. You've talked about prudence in 2026 within DI, but also the confidence in the midterm. When we look at your EPS guidance, it does not imply a huge amount of margin upside at the group level. You have talked about some incremental investments in innovation and things like that. When we think about that bridge from revenue growth to EPS growth, why should we expect a higher amount of growth coming from increased profitability?
The second question, which is kind of linked to that, is obviously your leverage will drop when you deconsolidate Healthineers, your balance sheet's deployment capability goes up significantly, either through buybacks or M&A. When we think about that EPS guidance, is that based on the portfolio as it is today or including some of the optionality for deploying your balance sheet in the future? Thank you.
Yeah, thank you, Martin. I think it's still fair to call it prudent and not conservative because, I mean, there's such a hell lot of volatility in the markets and also the geopolitical aspects that Roland has been discussing before that it's really hard to predict in a fast-moving, short-cycle business what's going to happen when and at which point in time.
We have been deliberately choosing a wide range for both top line and bottom line on the DI side to make sure that we know what we do and can live up to our own commitments. It does not exclude being better than the midpoint if circumstances allow. Of course, when it comes to top line growth dropping through, it is about investments and capital allocation. When we talk capital allocation, we talk about dividends and share buyback on the one hand side, but also on investing. I would like to repeat what Roland said in his presentation and what I tried to summarize in mine. I mean, we have been spending such a huge amount of money in shaping a technology leader in R&D. We will continue to do that. We are the AI-prone leader in the industrial space. Why missing out that opportunity?
We will still well balance investments and drop through to bottom line. That is what we did, I believe, meaningfully well throughout the last decade, and we will continue doing that. I am absolutely convinced of that. Therefore, it is both investing into future at a point when paradigm is shifting. That is crucial to be a leader of the gang instead of a follower that will never make it again to the lead. Therefore, this is a part of it, reinvesting rationale, and that includes CapEx as well. On the other hand, that is why I mentioned and underpinned it a couple of times. The ultimate yardstick, I believe, is free cash flow. We are fully committed to delivering on those high levels that we delivered before, which again is an enabler to keep the high level of total shareholder return.
That is also in part a bit answering the second part of your question. We have a very ambitious share buyback program, which is ahead of time in a meaningful format. If and when we complete that, potentially ahead of time, there would be another one. You can also expect us to again prudently share the ultimate outcome, free cash flow in a meaningful way with a progressive dividend, with a share buyback program, and also with meaningful share price development on the way forward. That is what we are committed to, and that is what we feel encouraged with. Again, I know that fiscal 2026 with that heavy impact on exchange rate is kind of hard to swallow. You may also recognize that in 12 years, I have the pleasure to do this annual press conferencing.
We never used exchange rate as a parameter for guiding, but the relevance and magnitude in this fiscal year 2026 is a mandate and an imperative to do so to not mislead anyone. Midterm perspectives, we will be fine. Short term, as a matter of fact, will be impacted by exchange rate. If you add back this EUR 0.70-EUR 0.80 in EPS, that will be only lost by translation of U.S. dollar, if you take it black or white. If you add that back, you will see that we clearly double digitally increasing EPS. I think operationally, that makes a hell lot of sense to steer with a slow but steady hand and not overreacting.
Thank you, Roland. Thank you, Ralf, and thank you everyone for joining. We will now close our webcast.
The deep dive sessions after the lunch break will not be streamed, but they will be available on our website as a replay after the event.