Siemens Energy’s Record €17.7bn Quarter Fails to Halt Profit-Taking as Gamesa Turnback Looms

Siemens Energy shares fall 5% on profit-taking despite record €17.7bn orders and doubled free cash flow guidance to €8bn; Gamesa loss narrows but activist calls for spin-off.

Shares in Siemens Energy slid nearly 5% on Friday to close at €169.18, even as the industrial group delivered a quarter that smashed expectations across almost every metric. The decline — a 4.98% drop on Xetra — looks less like a loss of confidence in the business and more like a pause after a blistering rally that has left the stock up 123% over the past twelve months and 37.77% year-to-date.

Yet the profit-taking obscures what was arguably the company’s strongest set of numbers in years. Orders poured in at a record €17.7 billion during the second quarter, swelling the backlog to €154 billion — a figure that gives management exceptional visibility into future revenues. More than half those orders came from the United States, where spending on data-centre infrastructure is running at a torrid pace. US orders nearly doubled to €6.94 billion, while revenue in the region hit €2.75 billion.

Cash flow guidance doubled as profitability jumps

The clearest sign of the company’s operational momentum came in the free-cash-flow forecast. Management now expects free cash flow before tax to reach around €8 billion for the full year, double its previous estimate of €4-5 billion. Net income is projected at roughly €4 billion, while revenue growth has been lifted to a range of 14-16% and the underlying margin guidance raised to between 10% and 12%.

For the quarter itself, revenue rose 8.9% on a comparable basis to €10.3 billion, and profit before special items climbed to €1.16 billion. The book-to-bill ratio hit 1.72, and chief financial officer Maria Ferraro said 93% of expected second-half sales are already covered by orders. Looking further out, about 80% of 2027 revenue is secured.

The two divisions leading the charge were Gas Services and Grid Technologies, both of which posted quarterly records. Gas Services alone collected €8.9 billion in new orders. The surge in demand from hyperscale data centres, particularly in the US, is fuelling need for gas turbines, grid connections and other energy infrastructure that Siemens Energy supplies.

Gamesa’s loss narrows but activist pressure builds

Progress at the long-troubled wind turbine division Siemens Gamesa has been slower, but tangible. The unit’s loss before special items shrank to €44 million from €249 million a year earlier, with the margin improving to minus 1.7% from minus 9.2%. The company also landed the first commercial orders for its new SG 7.0 platform, which is expected to replace the problematic 5.X series.

That operational improvement has done little to satisfy activist investor Ananym Capital. The US hedge fund’s co-founder Charlie Penner is publicly calling for a strategic review of Gamesa that could lead to a spin-off, arguing such a move could unlock 40-60% value for shareholders. Chief executive Christian Bruch has rejected the idea, insisting the division will complete its turnaround under the parent company’s roof.

Gamesa remains the biggest swing factor in the outlook. If the unit reaches break-even as planned, the group’s upgraded guidance looks realistic. If it stumbles, the structural debate will flare again and could weigh on the share price even as the rest of the business hums.

Analysts raise targets as buyback programme expands

Investment banks have responded to the results by lifting their price targets. Goldman Sachs now sees the stock reaching €212, while JPMorgan has set a target of €225 — implying more than 30% upside from Friday’s close.

Shareholders are also being rewarded directly. Siemens Energy plans to increase its share buyback by up to €1 billion this financial year. Together with a dividend of €0.6 billion paid in March, total returns to equity holders are set to hit €3.6 billion.

With a fully packed order book and cash generation accelerating, the company’s industrial story has rarely looked stronger. But the stock’s retreat below the recent high of €188 shows that investors are not yet ready to ignore the risk still embedded at Gamesa. The coming months will test whether the wind business can deliver enough progress to keep the broader narrative on track.