Q4 2024 Siemens Energy AG Earnings Call Transcript
Key Points
- Siemens Energy AG (SMEGF) delivered strong growth and significant margin expansion, reaching the top end of its guidance for fiscal year 2024.
- The company generated more than EUR900 million of free cash flow in the quarter, with a record order backlog of EUR123 billion.
- Revenue growth is expected to be between 8% and 10% for fiscal year 2025, driven by grid technologies and transformation of industry.
- Siemens Energy AG (SMEGF) is targeting group margins between 10% and 12% by fiscal year 2028, reflecting improved operational performance and a better order backlog.
- The company is investing in capacity expansion, including a 30% increase in large gas turbine production and significant investments in grid technologies, to capture future growth opportunities.
- Siemens Gamesa reported a loss of EUR1.8 billion, indicating ongoing challenges and the need for a turnaround.
- The company expects Siemens Gamesa to remain cash flow negative for the next couple of years, with significant cash outflows anticipated in 2025 and 2026.
- There are concerns about potential overcapacity in the gas turbine market, as all major players are expanding their production capabilities.
- The onshore wind segment is expected to experience a slow revenue ramp-up, impacting overall growth in the wind business.
- The company is still working through a EUR3 billion onerous backlog at Siemens Gamesa, which could affect future profitability.
(audio in progress) Our call today. And as Michael indicated, we would like to do it a bit in two sections. First of all, Maria and myself will go through the usual reporting. And then thereafter, we will address on how we want to deliver midterm and the different business and how we execute our strategy going forward.
First of all, I'm pleased to say that we not only delivered strong growth and significant margin expansion, but that we have reached the top end of our guidance for fiscal year '24 for all the key KPIs and even after raising our guidance in quarter two of this fiscal year.
Cash flow came in very strong, and we generated more than EUR900 million of free cash flow in the quarter. We booked EUR50 billion of orders and again, finished the year with a record order backlog with significantly better margin quality. This means that we have built the case for strong growth and rising profitability for many years to come.
Electricity demand growth remained strong,
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