Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Siemens Energy AG (SMEGF, Financial) reported a strong performance in Q2, leading to an upgrade in full-year guidance across all key performance indicators.
- The company achieved a record order intake of EUR 14.4 billion, reflecting a 52.3% growth compared to the previous year.
- Revenue increased by over 20% to EUR 10 billion, marking the highest quarterly revenue since the company's inception.
- Profit before special items rose significantly to EUR 900 million, with a profit margin of 9.1%, an improvement of 700 basis points year over year.
- Cash flow exceeded expectations, reaching EUR 1.4 billion for the quarter, contributing to a strong balance sheet with EUR 4.7 billion in net cash.
Negative Points
- The global economic outlook remains uncertain due to potential impacts from tariffs imposed by the United States and other countries.
- Siemens Gamesa reported a negative profit of EUR 249 million before special items, although this was an improvement from the previous year.
- The company faces challenges in the US market due to tariffs, which could lead to increased costs and potential project delays.
- Despite strong performance, the company anticipates a high-double-digit million euro impact from tariffs in the second half of the fiscal year.
- There is ongoing uncertainty regarding the conversion of reservation agreements into firm orders, which could impact future revenue.
Q & A Highlights
Q: Can you discuss the dynamics of slot reservations in Gas Services, including pricing and customer composition?
A: We converted 8 gigawatts from the first quarter into orders and took on an additional 9 gigawatts, resulting in a net increase of 1 gigawatt. The pricing environment remains favorable, with improvements in pricing and margin expansion. Customer composition is mixed, involving utilities, energy companies, investors, and technology firms. The appetite for reservation agreements remains high, and we expect this trend to continue.
Q: What is driving the aftermarket growth in Gas Services, and how does it relate to pricing versus volume?
A: Aftermarket growth is primarily driven by strong utilization across regions, with volume being a more significant factor than pricing. The backlog margin improvement is more pronounced in new unit margins than in service margins. Additionally, the aftermarket includes elements like nuclear service agreements and major turnarounds, contributing to growth.
Q: How are pricing dynamics evolving, particularly in the context of offshore wind and customer discussions?
A: Pricing momentum in 2025 is less pronounced than in 2024, with some projects experiencing prolonged discussions. While pricing is stabilizing, especially in Gas Services and Grid Technologies, we continue to focus on cost-out measures to remain competitive. Offshore wind pricing is less affected by turbine costs and more by general infrastructure expenses.
Q: Can you provide insights into the tax development and the potential of tax loss carryforwards?
A: We have started utilizing tax loss carryforwards, leading to lower-than-expected taxes. The tax loss carryforwards are substantial, varying by country, with a low-triple digit amount expected to be utilized this year. We aim to maintain an effective tax rate of 25% to 30%.
Q: How should we think about the medium-term margin progression in Gas Services?
A: The fundamental logic of margin improvement is correct, with a progression expected. However, there may be some volatility due to various factors. We are well-positioned with a strong backlog, and while a linear progression is possible, we will provide a mid-term outlook after the summer for more clarity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
