Siemens Energy (LON:0SEA) reported what management described as a “strong start” to fiscal 2026, pointing to record order intake and a sharp increase in free cash flow during a media Q&A session for the company’s first quarter.
Facilitator Tim Proll-Gerwe said the quarter produced the best order intake since Siemens Energy became independent, with orders reaching €17.6 billion, driven primarily by Gas Services. He added that the order backlog rose to a new record of €146 billion. Earnings before special items were €1.159 billion, representing a 12% margin, while net income came in at €746 million. Free cash flow before taxes totaled €2.87 billion.
Gas turbine demand accelerates, with long lead times shaping customer behavior
To illustrate the change in pace, Bruch noted that Siemens Energy sold 200 gas turbines over the entire prior year, meaning Q1 sales were already about half that level. He also emphasized that not all gas demand is tied to data centers, stating that the largest gas order in the quarter was in Europe and “was not for a data center.” Bruch singled out Poland as “a very strong country for us in this quarter,” describing the orders as related to general power supply.
On pricing, Bruch said new orders carry “a positive margin potential” compared with older orders already in the book, and he said the company is still seeing price increases on average, though conditions vary by region.
Data center exposure: grids and gas both contributing
Bruch discussed data center-related demand across two areas: grid technology (including transformers and connections) and gas turbines. For the grid portion, he said Siemens Energy saw mid- to high triple-digit millions of euros in the quarter tied to data centers. He also referenced that grid-related data center business totaled about $2 billion last year and said the company now expects that figure to be “somewhat higher” on the grid side.
On the gas side, Bruch said data center-related demand amounted to about 22 gigawatts of generation capacity, including both orders and firm reservations, and he stated that payments had already been made. He said this total represented four data centers and compared it to an overall gas turbine-related package of 80, implying roughly 25% of that gas turbine package is linked to data centers.
When asked about the firmness of turbine demand and whether units will be built and delivered, Bruch said the company currently sees no cancellations. He distinguished between “reservations” and firm contracts, noting that reservation fees have been paid. He also said that in the prior quarter, 12 gigawatts of reservations were converted into 12 gigawatts of contracts.
Investment plans emphasize Europe, while U.S. expansion targets capacity needs
Bruch addressed the company’s capital investment plans through 2028, saying that while not every project has been defined by region, most investments will be in Europe, reflecting Siemens Energy’s largest footprint. He said the company’s approach centers on expanding existing sites rather than building entirely new capacity where long-term utilization is uncertain.
Bruch added that Siemens Energy has invested $1 billion in Germany alone over the last three years. He also pointed to the company’s recently announced plan to invest more than $1 billion to expand capacity in the U.S., describing the move as driven by market demand and the need to strengthen local capacity. In response to questions about whether U.S. investment is partly tactical, Bruch said the investments are “indeed driven by the electricity market.”
He also cited a book-to-bill ratio of 3.3 as evidence of the demand environment. On capacity planning more broadly, Bruch said Siemens Energy is planning based on visibility through 2030, while anything beyond that is “speculation.” He said the company expects demand to moderate at some point and is avoiding decisions—such as building entirely new plants for gas—that would require confidence in utilization beyond 2030.
Addressing concerns that U.S. turbine manufacturing might come at the expense of German operations, Bruch said Siemens Energy continues to invest heavily in Berlin and described prospects for the Berlin site as good. He said the company is planning an additional larger building at the site to bring employees together.
Supply chain: rare earths monitored, no current shortages cited
Bruch said rare earth supply is a topic the company is monitoring, referencing materials such as yttrium used in blade coatings and magnets. Asked specifically about scandium, he said he was not certain about its use. He added that Siemens Energy is not currently facing supply issues and said suppliers are providing the necessary materials, including powders. However, he said the company is focused on improving supply chain resilience and is discussing how to participate in broader programs in the European Union and with the U.S. administration, including potential supply chain initiatives and increased warehousing.
Siemens Gamesa: management reiterates break-even target, expects improvement in second half
Bruch said he is not concerned about a lower wind book-to-bill in Q1, describing the offshore wind business as volatile from quarter to quarter, with individual orders often reaching “billions.” He said the outlook looking toward 2029 and 2030 is “very good.”
On Siemens Gamesa’s path to profitability, Bruch reiterated the target of reaching break-even in 2026, but cautioned against focusing on quarterly timing. He said performance should be viewed on a six-month basis, and he expects the second half of the year to be stronger than the first. He said he would be surprised if break-even were achieved as early as Q2.
Bruch also referenced early sales of the SG 7.0 turbine platform (the successor tied to the 5.X onshore platform). Asked about demand for onshore turbines, he said the pipeline is developing step by step, but Siemens Energy is being selective on terms and conditions. He said the company would rather forgo orders than take on “extra risk” or accept difficult contract terms. Later, Siemens Energy confirmed that onshore orders cited in the discussion included deals in Spain and Germany, as well as business in New Zealand and Japan.
Finally, in response to a question on Grid Technologies margin expansion, Bruch attributed the improvement to execution against a strong backlog built over the last two to three years, where margin expansion was achieved and is now being realized in results. He said he expects that improvement journey to continue.
About Siemens Energy (LON:0SEA)
Siemens Energy AG operates as an energy technology company worldwide. It operates through Gas Services, Grid Technologies, Transformation of Industry, and Siemens Gamesa segments. The company provides gas and steam turbines, generators, and heat pumps, as well as performance enhancement, maintenance, customer training, and professional consulting services for central and distributed power generation; and high voltage direct current transmission systems, offshore windfarm grid connections, transformers, flexible alternating current transmission systems, high voltage substations, air and gas-insulated switchgears, digital grid solutions and components, and storage solutions.
