Siemens Aktiengesellschaft (ETR:SIE) has reported a robust start to fiscal 2026, showcasing a significant increase in orders, diverse revenue growth, and a notable improvement in its industrial profit margin, despite facing currency challenges. Following this positive performance in the first quarter, the company has raised its full-year earnings-per-share outlook.
Record Orders and Profit Margins
CEO Roland Busch characterized the initiation of fiscal 2026 as a “strong start,” amidst ongoing geopolitical uncertainties. The company achieved a book-to-bill ratio of 1.12, supported by a record order backlog of EUR 120 billion. The total profit from the industrial business reached EUR 2.9 billion, leading to a profit margin increase to 15.6%. Busch noted that negative currency translation effects accounted for approximately 60 basis points.
Basic earnings per share before purchase price allocation (EPS pre PPA) stood at EUR 2.80. Free cash flow for the quarter was reported at EUR 0.7 billion, which management described as a seasonal change following an exceptionally strong fourth quarter in fiscal 2025.
Smart Infrastructure Growth Driven by Data Centers
CFO Ralf Thomas highlighted the exceptional performance of Smart Infrastructure, with orders rising by 22% to a quarterly record of EUR 7.2 billion. The book-to-bill ratio for this segment was 1.30, and the order backlog surged to an all-time high of EUR 20.2 billion. This growth is primarily attributed to Electrification, where orders increased by 38%, and Electrical Products, which rose by 22%. Notably, data center orders reached a record EUR 1.8 billion, with approximately half stemming from larger contracts.
Revenue in Smart Infrastructure saw a 10% rise, exceeding internal expectations, with Electrification accounting for a significant portion of this growth at 22%. The segment’s profit margin improved by 210 basis points year-over-year to reach 19.0%. Thomas also mentioned a commodity hedging benefit of around 100 basis points, counteracting a roughly 60 basis point negative currency impact.
Regionally, orders from the U.S. surged by 54%, largely driven by demand from data centers and infrastructure projects. Looking ahead, Thomas projected that comparable revenue growth for Smart Infrastructure would be in the upper half of the 6%-9% guidance range, bolstered by the strong backlog.
Digital Industries and Mobility Update
In the Digital Industries segment, orders increased by 13% to EUR 4.8 billion, with a book-to-bill ratio of 1.07. While the automation business showed steady improvement, market conditions remain challenging, with limited visibility. Software orders approached EUR 1.7 billion, largely driven by substantial electronic design automation deals. Revenue in Digital Industries rose by 10%, with software sales up 11% and automation revenues increasing by 9% to EUR 7.9 billion.
The profit margin for Digital Industries was reported at 17.8%, surpassing expectations due to gains in pricing and productivity. However, costs related to integrating Altair and Dotmatics reduced the segment margin by 70 basis points in Q1, with expectations of an approximately 100 basis point impact for the full fiscal year 2026.
In the Mobility sector, orders totaled EUR 2.9 billion, reflecting growth compared to the previous year, while the book-to-bill ratio was recorded at 0.90. The order backlog stood at EUR 51 billion, which includes EUR 15 billion from service contracts. Revenue increased by 9%, driven by sales in rolling stock and customer services, with a profit margin improvement to 9%.
Future Outlook and Shareholder Returns
Siemens has updated its fiscal 2026 guidance, now aiming for the upper half of the 6%-8% comparable revenue growth range. The company has raised its full-year basic EPS before PPA forecast to between EUR 10.70 and EUR 11.10, marking an increase of EUR 0.20 at the midpoint.
Regarding cash flow and capital allocation, operating working capital rose by about EUR 1.3 billion in Q1, consistent with seasonal trends. Siemens paid around EUR 400 million to settle a long-standing obligation related to nuclear waste removal in Hanau, Germany. The company remains optimistic about achieving “industry benchmark levels” of double-digit cash return on revenue for fiscal 2026.
Siemens maintains a low industrial net debt-to-EBITDA ratio of 0.9 and holds double-A ratings from both S&P and Moody’s. The company also declared a dividend of EUR 5.35 and has completed nearly EUR 4.4 billion in share buybacks over the past two years. Plans to retire 18 million treasury shares in March will reduce the total capital stock to 782 million shares.
In terms of portfolio actions, Busch confirmed that Siemens is advancing steps toward the planned deconsolidation of Siemens Healthineers, with further details expected in the spring. Siemens has also sold its airport logistics business in the U.S. to Vanderlande, marking a completed transaction.
Overall, Siemens’ strong performance in the first quarter reflects its strategic focus on innovation and market opportunities, positioning the company for continued growth as it navigates a complex global landscape.
