Siemens Aktiengesellschaft (ETR:SIE) reported higher orders, revenue and industrial profit in its fiscal second quarter, with management pointing to strong demand from data centers, industrial software and electrification while warning that geopolitical volatility and tariffs remain key risks.
Chief Executive Roland Busch said Siemens “continued our successful path of profitable growth” despite a “geopolitically demanding” environment. He said the company’s direct revenue exposure to the Middle East is expected to be limited to 3% to 4% in fiscal 2026, while direct supply exposure is around 1% of purchasing volume. Busch said Siemens had not seen material changes in broader customer buying behavior so far.
Data center demand drives Smart Infrastructure
Smart Infrastructure delivered the strongest order momentum among Siemens’ core businesses. Chief Financial Officer Veronika Bienert said orders rose 35% to a record EUR 7.5 billion, with a book-to-bill ratio of 1.27. Data center orders reached a record EUR 1.9 billion, supported by demand from hyperscalers, colocation providers and semiconductor companies building capacity for AI workloads.
Revenue at Smart Infrastructure grew 10%, with the electrification business up 18%. The division’s margin rose to 18.6%, despite a 110-basis-point currency headwind and higher commodity costs. Bienert said Siemens expects pricing measures in the product business to increasingly offset higher commodity prices in the second half of fiscal 2026.
Busch said Siemens’ data center revenue grew more than 45% in the first half to EUR 1.8 billion and said the company expects to maintain that pace through fiscal 2026. He said Siemens will further expand low- and medium-voltage production capacity in the U.S., including at locations in the Carolinas.
During the analyst question-and-answer session, Busch said Siemens believes it “slightly gained market share” in electrification for data centers, supported by delivery capabilities, manufacturing expansion and supply chain control. He said the growth was not dilutive to margins, adding that it was “supporting a great margin in that business.”
Digital Industries benefits from software, automation recovery
Digital Industries orders rose 12% to EUR 4.8 billion, with a book-to-bill ratio of 1.03. Bienert said market dynamics in automation have been gradually improving, though Siemens has limited visibility into how the Middle East conflict could affect investment sentiment. The division’s backlog increased to EUR 10.2 billion, with a growing software share.
Revenue at Digital Industries increased 8%. Software revenue rose 14%, with broad-based double-digit growth across PLM, simulation and EDA. Automation revenue grew 6% to EUR 3 billion, led by short-cycle factory automation. Digital Industries’ margin came in at 18.5%, ahead of expectations, supported by software profitability, the nearing completion of the SaaS transition and cost synergies tied to the Altair acquisition.
Busch said Siemens’ digital business grew 19% in the first half of fiscal 2026, ahead of the 15% ambition level the company set last November. He said organic annual recurring revenue growth in software improved to 11% year over year, and that integration of Altair and Dotmatics is progressing well. Siemens has implemented targeted cost-saving measures of $150 million following the Altair integration, with the bottom-line impact expected to follow.
In China, Bienert said the local portfolio grew at a mid-20s rate, while distributor stock levels remained stable. Busch said April showed “another strong growth” in automation globally, above Siemens’ forecast. He described China’s improvement as gradual rather than a sharp rebound, supported by high-tech manufacturing, exports and adoption of new technologies.
Mobility pressured by tariffs and project delays
Mobility reported orders of EUR 5.3 billion, well above the prior year, with a book-to-bill ratio of 1.76. The backlog stood at EUR 53.5 billion, with about 30% tied to service business. Busch said Siemens recently secured a contract to deliver up to 200 double-deck Desiro platform trains to SBB for Swiss commuter rail networks, valued at about CHF 2 billion, which will be accounted for in the third quarter.
However, Mobility revenue declined 2% from a strong prior-year comparison. Bienert said the division was affected by U.S. tariffs, mainly in rolling stock, as well as conversion delays in large-scale rail infrastructure projects in Europe. She said the tariff-related reassessment of U.S. project calculations affected both revenue and profit, reducing Mobility’s margin by 170 basis points. Mobility’s margin was 6.9% in the quarter, also affected by severance charges tied to factory network optimization.
Guidance updated by segment, group outlook confirmed
Siemens confirmed its group-level outlook for fiscal 2026. Bienert said the company continues to expect to reach the upper half of its 6% to 8% group revenue growth guidance and anticipates EPS before PPA of EUR 10.70 to EUR 11.10.
- Digital Industries: Siemens raised expected comparable revenue growth to 7% to 10% and lifted the margin outlook to 17% to 19%.
- Smart Infrastructure: The company raised expected comparable revenue growth to 8% to 10% and continues to expect margins in the upper half of the 18% to 19% range.
- Mobility: Siemens lowered expected revenue growth to 5% to 7%, while maintaining the margin outlook at 8% to 10%, now expected toward the lower end.
Bienert said Siemens remains confident it will again achieve a double-digit cash return in fiscal 2026. The company retired 18 million shares in March and is close to completing its current EUR 6 billion buyback program. Siemens also announced a new share buyback program of up to EUR 6 billion over as long as five years.
On portfolio actions, Busch said Siemens has clarified the timeline for the planned spin-off of Siemens Healthineers shares, with a shareholder vote planned for the company’s next ordinary annual shareholders meeting. Bienert said discussions with tax authorities are progressing constructively and that Siemens is working through contractual arrangements between Siemens AG and Siemens Healthineers.
AI and software strategy remain central themes
Busch devoted a significant portion of the call to Siemens’ industrial AI strategy. He said Siemens is focusing on AI applications that connect the digital and real worlds, including engineering agents, physical AI in factories, digital twins and AI-enabled simulation.
He highlighted the company’s Eigen Engineering Agent, which he said can autonomously plan and execute industrial automation engineering tasks, with pilot deployments showing up to 50% greater engineering efficiency and up to 80% higher solution quality. Busch also pointed to Siemens’ Digital Twin Composer, saying customer interest has been “massive,” with more than 300 inquiries from large enterprises since its launch at CES.
In response to an analyst question on software and AI monetization, Busch said Siemens is examining usage-based and token-based models for AI-enabled products, while Bienert said user-based licenses will continue to exist alongside newer monetization models where required.
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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