Siemens Energy’s Record €17.7bn Quarter Sparks Cash Flow Upgrade and Capacity Expansion Plans

Siemens Energy more than doubles its 2025 free cash flow target to €8 billion, powered by record orders for grid equipment and data centers amid AI-driven demand.

Siemens Energy has stunned the market by more than doubling its full-year free cash flow target to €8 billion, powered by a surge in orders for grid equipment and data center infrastructure. The new forecast, disclosed alongside a blowout second-quarter performance, underscores how deeply the group is benefiting from the global build-out of AI-driven computing capacity.

Order intake for the three months ended March jumped 30 percent year-on-year to €17.7 billion, a new quarterly record. The surge was led by the Grid Technologies division, where orders climbed 41 percent, fueled in part by nearly €2 billion in data center contracts booked during the first half. CEO Christian Bruch offered a measured take on the AI contribution, noting that about one in every four gas turbines sold now goes to data centers, while the share for transformers and switchgear sits below ten percent.

The swelling order book lifted the total backlog to €154 billion, providing exceptional visibility into future revenues. CFO Maria Ferraro said that coverage of the second-half 2026 revenue plan stands at roughly 93 percent, while for fiscal 2027 the figure hovers just below 80 percent. Demand, she added, looks robust well into the next decade.

Revenues on a comparable basis rose 8.9 percent to €10.3 billion in the quarter. Net income hit €835 million, or €0.89 per share, compared with €0.50 per share a year earlier. Operating profit before special items reached €1.2 billion. The group’s cash flow before taxes came in at almost €2 billion for the first half, a 42 percent improvement that supports the decision to expand the ongoing share buyback program into the autumn.

One weak spot was the Transformation of Industry segment, which includes the compressor business and saw an order decline, partly due to softer demand from the Middle East.

Management has now raised its full-year guidance across several metrics. Revenue is expected to increase by a double-digit percentage, while the operating margin should improve to as much as 12 percent. Net profit is forecast at around €4 billion. The standout revision, however, concerns free cash flow before taxes: Siemens Energy now expects an inflow of €8 billion, up from a previous maximum of €5 billion.

The strong momentum has prompted analyst upgrades. JP Morgan assigns a price target of €225, while Goldman Sachs has set a fair value of €212, both citing the group’s strong position in the energy transition. Deutsche Bank rates the stock a “Buy” but cautions that the elevated price-to-earnings ratio already discounts a significant portion of the growth story.

Despite the upbeat news, shares closed at €178.04 on Thursday, roughly five percent below their 52-week high of €188.00. The stock has still gained about 45 percent since the start of the year. Looking ahead, Siemens Energy plans to expand transformer and switchgear capacity by around 50 percent by 2030, with new medium-term targets set to be unveiled alongside the full-year results in November.