Siemens Q2 profit misses estimates as geopolitical pressures persist

Siemens AG reported weaker-than-expected second-quarter earnings on Wednesday.

The German engineering group posted strong order growth and maintained its full-year outlook despite what it described as a “very demanding” geopolitical environment.

The trains-to-industrial software maker said revenue for the three months ended March 31 remained flat at €19.76 billion, missing analysts’ forecasts of €20.14 billion in a company-compiled consensus.

Industrial profit fell 8% year-on-year to €2.97 billion, below market expectations of €3.046 billion.

The decline was partly attributed to a €300 million gain booked in the prior-year quarter following the sale of its wiring business, which had also boosted margins.

Net profit declined to €2.24 billion from the previous year but still came in above analysts’ expectations of €2.13 billion.

Orders rose 11% during the quarter.

The results are closely watched by investors as Siemens is considered a major supplier to industries and infrastructure projects globally, often providing insight into broader economic activity.

Orders rise despite geopolitical pressures

Chief Executive Roland Busch said the company delivered a solid performance despite ongoing global uncertainty.

“We delivered a successful second quarter despite the geopolitical environment, which remains very demanding,” Busch said.

On a comparable basis, excluding currency translation and portfolio effects, second-quarter orders climbed 18%, with double-digit growth recorded across most industrial businesses.

The company said strong performances in factory automation, building infrastructure, and mobility businesses supported the rise in orders.

Comparable revenue increased 6%, driven mainly by Smart Infrastructure and Digital Industries.

On a nominal basis, orders rose to €24.1 billion, while revenue remained at the prior-year level of €19.8 billion due to significant negative currency translation effects.

Siemens reported a book-to-bill ratio of 1.22 during the quarter.

The company said it is seeing an improving environment in the electronics and semiconductor sectors, alongside continued demand from industrial building users, data centres, and utilities.

Profitability supported by industrial businesses

Profit for the industrial business stood at €3.0 billion with a margin of 15.4%.

In the same quarter last year, Siemens had benefited from a €0.3 billion gain linked to the exit of a business within Smart Infrastructure, contributing to stronger profitability.

Net income reached €2.2 billion.

Basic earnings per share stood at €2.60, while EPS before purchase price allocation accounting came in at €2.81.

Free cash flow from continuing and discontinued operations rose sharply to €1.7 billion during the quarter.

Busch said Siemens continued to benefit from its technological capabilities and exposure to growth markets.

“Digital Industries and Smart Infrastructure posted impressive overall performance clear evidence that we’re on a path of profitable growth,” he said.

He added that Siemens was expanding its industrial artificial intelligence leadership through its Eigen Engineering Agent and sees AI as a significant growth driver for its hardware, software, and services businesses.

Siemens confirms fiscal 2026 outlook

Chief Financial Officer Veronika Bienert said the company’s operating performance and strong cash flow demonstrated resilience.

“Our operating businesses’ convincing performance and our strong free cash flow prove our resilience,” Bienert said.

“As a result, we’re very well positioned to reach our full-year group targets.”

Bienert also said Siemens’ newly announced share buyback programme would allow shareholders to participate in the company’s growth while supporting disciplined capital allocation.

Siemens confirmed its fiscal 2026 outlook and reiterated expectations for comparable revenue growth between 6% and 8%, excluding currency and portfolio effects.

The company also expects a book-to-bill ratio above 1 for fiscal 2026, which runs through September.

Siemens maintained its forecast for EPS before purchase price allocation accounting in the range of €10.70 to €11.10.

Digital Industries now expects comparable revenue growth of 7% to 10%, compared with its earlier guidance of 5% to 10%.

The division also raised its expected profit margin range to 17% to 19%.

Smart Infrastructure increased its expected revenue growth range to 8% to 10% while maintaining its margin guidance of 18% to 19%.

Mobility, however, lowered its comparable revenue growth outlook to 5% to 7% from the previously expected 8% to 10%, while maintaining margin expectations of 8% to 10%.

The company said its outlook excludes impacts from legal and regulatory matters.

The guidance indicates that the company continues to expect stable demand across several of its major business areas despite geopolitical tensions and ongoing economic pressures.