Siemens Aktiengesellschaft (ETR:SIE) reported higher orders, revenue growth and stronger free cash flow in its fiscal second quarter, while management said geopolitical uncertainty and currency headwinds remain key risks for the rest of the year.
Chief Executive Roland Busch said Siemens continued on “a successful path to profitable growth” despite a “very tense geopolitical environment.” He said the company has not yet seen a significant impact on customer buying behavior from the conflict in the Middle East, while noting that the region is expected to account for only 3% to 4% of Siemens’ revenue in the current year and about 1% of procurement volume.
Orders at the group level rose 18% year over year to EUR 24.1 billion, lifting the book-to-bill ratio to 1.22 and pushing the order backlog to a record EUR 124 billion. Revenue grew 6%, with gains led by Digital Industries and Smart Infrastructure. Profit in the industrial business reached EUR 3 billion, corresponding to a margin of 15.4%. Siemens said currency headwinds reduced the industrial profit margin by 80 basis points, though those effects are expected to ease in the second half of fiscal 2026.
Basic earnings per share before purchase price allocation accounting were EUR 2.81, including a previously reported gain from the sale of the company’s airport logistics business in the U.S. Free cash flow improved to EUR 1.7 billion after what management described as a weaker first quarter.
Smart Infrastructure Posts Record Orders on Data Center Demand
Smart Infrastructure delivered what Chief Financial Officer Veronika Bienert called “an excellent performance across the board,” with orders rising 35% to a quarterly record of EUR 7.5 billion. The unit’s electrification business saw orders rise 62%, while the electrical products business increased 38%.
Bienert said the business benefited from contract wins with hyperscalers, co-location providers and semiconductor companies. Data center orders reached a record EUR 1.9 billion as customers expanded capacity for AI workloads. Smart Infrastructure’s backlog rose to EUR 22 billion, giving the company visibility “well into fiscal 2027,” according to Bienert.
Revenue in Smart Infrastructure rose 10%, with electrification up 18%. The unit’s profit margin increased 10 basis points year over year to 18.6%, despite a currency headwind of about 110 basis points and higher commodity costs. Siemens raised its fiscal 2026 comparable revenue growth outlook for Smart Infrastructure to a range of 8% to 10%, while continuing to expect the profit margin to come in the upper half of its 18% to 19% target range.
Busch said in the question-and-answer session that demand for data centers is expected to continue over the medium term, driven by the need for computing capacity for AI training and inference. He said growth could be constrained by network capacity or energy supply, but the company does not currently see weakness in demand.
Digital Industries Benefits From Software Growth
Digital Industries reported orders of EUR 4.8 billion, up 12% from the prior-year quarter, with a book-to-bill ratio of 1.03. The software business remained on a strong growth trajectory, with orders close to EUR 1.8 billion. Bienert cited AI momentum and large order wins in electronic design automation and product lifecycle management.
Revenue in Digital Industries rose 8%. Software revenue increased 14% on broad-based double-digit growth across PLM, simulation and EDA, while automation revenue rose 6% to EUR 3 billion, led by factory automation. The unit’s profit margin was 18.5%, higher than Siemens expected.
Bienert said Digital Industries is benefiting from the near completion of its transition to software-as-a-service and from cost synergies related to Altair. Integration-related costs from Altair and Dotmatics reduced the margin by 90 basis points in the quarter. Siemens now expects that impact to be around 80 basis points for the full year.
After the first half, Siemens raised its fiscal 2026 guidance for Digital Industries comparable revenue growth to the middle of a narrowed 7% to 10% range and now expects the unit’s profit margin to be between 17% and 19%.
Mobility Hit by Tariffs and Project Delays
Mobility recorded strong orders of EUR 5.3 billion, producing a book-to-bill ratio of 1.76, but revenue fell 2% from a strong prior-year quarter. Bienert said the business was held back by U.S. tariffs, mainly in rolling stock, and by conversion delays in large rail infrastructure projects, particularly in Europe.
The tariff reassessment reduced Mobility’s profit margin by 170 basis points, while severance charges added another 80-basis-point burden. The unit’s margin came in at 6.9%. Siemens lowered Mobility’s full-year revenue growth outlook to a range of 5% to 7%, while maintaining its 8% to 10% profit margin guidance, though management now expects the margin to be toward the lower end of that range.
Busch said Siemens does not see a need to change Mobility’s strategy. He said the company continues to improve costs, build out its supply chain in India and use AI to improve quality. In the U.S., he said Siemens is shifting volumes from Sacramento to Lexington as part of previously announced production network measures.
AI, Digital Growth and Portfolio Plans
Busch highlighted Siemens’ digital business, which grew 19% in the first half of fiscal 2026, above the 15% ambition level the company had announced previously. He said the growth is being driven by expanded Siemens Xcelerator software and digital services offerings and by software acquisitions.
He also emphasized Siemens’ Industrial AI strategy, including AI-enabled engineering tools, digital twins and automation products. Busch said Siemens launched an “Eigen Engineering Agent” aimed at moving from AI assistance to AI that can plan and execute engineering tasks end-to-end. He also cited customer interest in the company’s Digital Twin Composer, saying Siemens had received more than 300 inquiries from large enterprises since its launch at CES.
On the portfolio, Busch said Siemens has set a timeline for the planned spin-off of Siemens Healthineers shares, with a shareholder decision now planned for the company’s ordinary annual shareholders meeting in February 2027. In response to a question, he said Siemens is still awaiting reliable tax guidance from authorities before moving forward.
Full-Year Outlook Confirmed
Siemens confirmed its group-level outlook for fiscal 2026. The company continues to expect comparable revenue growth in the upper half of its 6% to 8% guidance range and basic EPS before purchase price allocation accounting of EUR 10.70 to EUR 11.10.
Bienert said Siemens expects research and development intensity to be slightly above prior-year levels due to additional investments in AI-based innovation. The company now expects severance costs of EUR 300 million to EUR 350 million for the year.
Siemens also announced a new share buyback program of up to EUR 6 billion over as long as five years, following the near completion of its current EUR 6 billion program. Bienert said the company remains committed to “stringent capital allocation and strong shareholder return.”
About Siemens Aktiengesellschaft (ETR:SIE)
Siemens Aktiengesellschaft, a technology company, focuses in the areas of automation and digitalization in Europe, Commonwealth of Independent States, Africa, the Middle East, the Americas, Asia, and Australia. It operates through Digital Industries, Smart Infrastructure, Mobility, Siemens Healthineers, and Siemens Financial Services (SFS) segments. The Digital Industries segment provides automation systems and software for factories, numerical control systems, servo motors, drives and inverters, and integrated automation systems for machine tools and production machines; process control systems, machine-to-machine communication products, sensors and radio frequency identification systems; software for production and product lifecycle management, and simulation and testing of mechatronic systems; and the Mendix cloud-native low-code application development platform.
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