Q4 2025 Siemens AG Earnings Call and Business Update - Part 1
Yes.
[music].
Speaker #1: Our orders reached €88 billion , 6% above prior year's level . Revenue grew by 5% , a total of €78.9 billion , and book to ratio of 1.1 .
Speaker #1: A high bill backlog of €117 billion. We move with confidence in our fiscal year 2026. Our industrial business showed strong performance, with a record profit of €11.8 billion.
Okay.
Yeah.
Good morning, everyone.
Speaker #1: Our free cash flow reached a historic €10.8 billion. This means we turned 14% of sales straight into cash, with €10.1 billion.
We are here to talk about growth sustainable profitable growth.
And this is important.
Accelerated growth.
Just look at what we have done in the last five years since we have become a focused technology company.
Speaker #1: record in net income for the third consecutive year , and finally , we achieved earnings per share . Prepay of €10 , €71 cents and we this .
This was our growth trajectory for the period, starting fiscal year 2021 until fiscal year 2025.
Speaker #1: As you know , for effects from dogmatics , adjusted Altair and in robotics . And we achieved this in spite of substantial uncertainties all around the world .
Average revenue growth, 8% per year in this period up from 2% in the previous decade.
Roland Busch: A leading pure-play medtech champion, more attractive for the capital market. What happens now? We intend to transfer 30% of shares to Siemens AG shareholders via direct spinoff. As a minority shareholder, we will continue to participate in the attractive business of Siemens Healthineers. In the medium term, we intend to reduce our shareholding to a financial asset. The transaction still needs regulatory clarification and a green light from both shareholder meetings, and more details will follow in early Q2, calendar year 2026. Let me assure you, Siemens is committed to managing its investments in Siemens Healthineers in a responsible and shareholder-focused manner.
Average profit margin of our industrial business.
Speaker #1: Geopolitics, new tariffs, and protectionism slow consumer spending. We created substantial value for all our stakeholders. Now let's take a look at the performance of our industrial businesses.
15% up from 10% and average free cash flow margin, 13% up from 7%.
Total shareholder return of 151%, we outperformed the Dax and other initiatives.
Speaker #1: Let's start with Digital Industries. We met the guidance as we did with all our businesses. Revenue declined by 4% as we had predicted because of a difficult market environment for our automation business.
Higher growth higher margin higher free cash flows.
This successful performance continues.
So let's take a look at our most recent past fiscal year 2025, and it was another record year for Siemens.
Speaker #1: And against a very , strong base of comparison for our software business . Profit margin 15.9% . by the This , way , excludes effects related to alternative mathmatics , which were not part of our guidance .
Our orders.
<unk> 88 billion euros, 6% above prior year's level revenue grew by 5% a total of $78 9 billion euros and book to Bill ratio of one one.
Speaker #1: Smart infrastructure growth: 9% revenue. They delivered at the upper end of the guided range, and profit margins were even more impressive at 18.3%.
High quality backlog of 117 billion euros.
Speaker #1: That's an all time record above and guidance . Conquer to the team . Mobility revenue . Strong growth again , that's the 10% .
We move with confidence in our fiscal year 2026.
Roland Busch: A new Siemens has taken shape, a company with less complexity, with simplified governance, with a fast-growing digital business, with an unmatched portfolio of industrial software and digital services, and with a strong portfolio in hardware, connected hardware that will be increasingly software-defined and enhanced with AI. In short, a Siemens with a highly synergistic portfolio ready to scale. Portfolio matters, but there's more to our fabric than the mix of our businesses. When we say we are changing our fabric, we also mean we are improving our operating model. Remember, stronger customer focus, faster innovations, higher profitable growth. Siemens is a strong company with a rich history, but this means legacy too. Too many systems, for example, ERP systems. Still, many silos, for example, data silos. Every single bit of this legacy made sense at a certain point in time, but times have changed.
Our industrial business.
Showed a strong performance.
A record profit of $11 8 billion euros, our free cash flow.
Speaker #1: upper And end of the guided range . Excellent execution . There is huge backlog of a and the team is just producing and delivering at the same time .
New Historic high $10 8 billion euros. This means we turned 14% of sales straight into cash.
Speaker #1: They successfully balance risk and results. The industry-leading profitability and free cash flow are strong. Siemens today is stronger than ever. Our strategy works.
With pinpoint $10 4 billion euros record in net income for the third consecutive year and finally, we are.
<unk> earnings per share pre PPA of 10 Euro 71 Euro cents and we adjusted this as you know for FX from Dogmatics Altair.
Speaker #1: We grow. We grow by combining the real and the digital worlds, and our ambition keeps growing. With our One Tech Company program, we are making changes to the fabric of our company and unlocking even higher growth in the future.
And in <unk>.
And we achieved this in spite of substantial uncertainties, all around devote geopolitics, new tariffs and protectionism.
Low consumer spending.
We created substantial value for all our stakeholders.
Speaker #1: Now, when we talk about our fabric, there are two important aspects. One is the portfolio, and the other one is our operating model.
Now, let's take a look at the performance of our industrial businesses.
Let's start with digital industries, we met the guidance as we did with all our businesses revenue declined by 4% as we had predicted because of difficult market environment for our automation business and against a very very strong base of comparison for our software business.
Speaker #1: Our operating model . This is how support and strengthen we our businesses with world class technologies and services , with higher and a huge set of high quality industrial data so that our businesses can innovate faster and serve our customers .
Roland Busch: The world has become more competitive. Companies need to be more resilient. Scale matters more and more. Speed matters more and more. We are giving our business an efficient, optimal environment so they can focus, so they can innovate faster, they can serve our customers better. That is how our new operating model is all about. We are building and rolling out services for all of our businesses, highly standardized, delivered in highly efficient ways, always up to date with the latest technology, and at world-class quality for everyone and at Siemens to scale. We do that. We do that because the world is squeezing out small. Digital tools allow us to use economies of scale in every possible way. Scale matters for data. Scale matters for AI. Scale matters when you want to be a powerful partner in a global ecosystem.
Marching 15, 9% this by the way excludes effects related to alternative medics, which were not part of our guidance.
Speaker #1: Even better . Now , let's take this to aspects one by one . Our portfolio in the last five years , we have put particular focus on streamlining it , preparing ourselves for the transformation .
Smart infrastructure, 9% revenue growth they delivered at the upper end of the guided range and profit margin was even more impressive with 18, 3%.
Speaker #1: through Both divestments and high growth acquisitions . In spun 2020 , we Siemens Energy . In the following years , we our so-called divested portfolio companies , companies for which Siemens was no longer the better owner .
That's an all time record and above guidance congratulations to the team.
Mobility strong revenue growth again, 10% and that's the upper end of the guided range excellent execution, there's a huge backlog of orders and the team is just producing and delivering at the same time, they successfully balance risk and opportunities.
Speaker #1: Six years ago, the total valuation was estimated to be €1.5 billion. In the end, our proceeds from these divestments totaled €7 billion.
The result.
Industry, leading profitability and free cash flow.
Speaker #1: On focus, where we can create the most value. Also, through disciplined acquisitions and, of course, always along our strategy to combine the real and the digital worlds.
Roland Busch: That's why we are creating one data fabric, one technology fabric, and one sales fabric for all Siemens. Let's look at these fabrics one by one to see how they can help our businesses grow faster. Let's start with one data fabric for all of Siemens. We are tearing down walls and bringing data where it belongs together. One ERP system, one CRM system, one data layer for internal data, for customer data, for external data, all connected, available real-time. Today, our customers can already use 250 data products, and with our data, we are feeding our AI models. Because scale matters, our customers and partners want to connect into our data fabric. We started with machine tool industry. Seven companies joined an alliance to pool data. Here is what our partners have to say.
Siemens today is stronger than ever.
Our strategy works, we are grow the grow by combining the <unk> and the digital votes.
Speaker #1: We acquired intelligent hardware companies , for example , Industrial Drive technologies for past trials , switchgear , Danfoss Fire Safety , CNS Electric in India for electrical and electronic equipment .
And our ambition keeps growing too.
With all want to accompany program, we are making changes to the fabric of our company and unlock even higher growth in the future.
Speaker #1: On top , we strengthened our digital business three SaaS with acquisitions , all cloud native skills . A provider for inventory management , reservation and ticketing software for our rail customers frame , a platform that .
Now when we talk about our fabric there are two important aspects one is the portfolio.
And the other one is our operating model, our operating model versus how we support and strengthen our businesses with world class technologies and services with higher efficiency and a huge set of high quality industrial data.
Speaker #1: design and sourcing connects of Supply electronic parts . Rightly , a provider for asset and maintenance solutions for buildings and in 2025 , we closed the acquisitions of Altair and Automatics with Altair .
So that our businesses can innovate faster and serve our customers even better.
Speaker #1: now the Siemens has world's most complete portfolio for AI powered design , engineering and simulation . Our customers now can build the most comprehensive , comprehensive , physics based twins digital and semantics .
Now, let's take these two aspects one by one.
Our portfolio.
In the last five years.
We have put particular focus on streamlining it preparing ourselves.
For the transformation, both through divestments and high growth acquisitions.
Speaker #1: We are now addressing more than $5 billion in our markets. Our customers can build a digital thread all the way from R&D to production.
Roland Busch: Of course, we believe that only secure and scalable data collaboration is unlocking the full potential, especially for industrial AI in manufacturing and production. By joining forces with industry leaders, we aim to accelerate innovation, improve efficiency, and shape the future towards a data-driven production. For that, you need to come to a joint model, to a joint sharing of data between the different processes. This is the reason why we said we need to join that alliance to bring together all that data, enhance the data with AI to come up with the next big jump in productivity for our customers. One data fabric, next is one technology fabric. This means technologies and services which our businesses need for their success. We build them once for everyone at world-class level. One set of technology building blocks. Take, for example, our software as a service business.
In 2020, we spun off Siemens energy and the following years, we divested our so called portfolio companies companies for which Stevens was no longer the better owner.
Speaker #1: This helps bringing medicines them and biochemicals to the market more quickly and at lower cost . Now . Now we make another important towards a highly synergistic Siemens We plan to portfolio .
Six years ago. The total evaluation was estimated to one 5 billion euros.
In the end our proceeds from these divestments totaled 7 billion euros.
Speaker #1: deconsolidate Siemens Healthineers . will term value This unlock long all , all our our shareholders for because it will allow both companies to tap their respective fully growth potentials into .
Focus on where we can create the most value also through disciplined acquisitions and of course always alone our strategy to combine the regime and the digital votes.
We acquired intelligent hardware companies for example.
Industrial drive technologies for B E B M Bobst.
Speaker #1: Siemens Healthineers is a success story. Since its IPO, the company has grown from €13 billion in revenue in 2018 to €23 billion in its acquisition in 2025.
Our switchgear Danfoss fire safety CNS electric in India for electrical and electronic equipment.
On top we strengthened our digital business with three source acquisitions, all cloud native.
Speaker #1: contributed the very approximately 4 billion to this industry , leading margins In are best in class offering product flow , high free flow reliable conversion cash , a strong , attractive business but one with increasingly less and less synergies .
Roland Busch: We can create the supporting infrastructure once for login, distributing, patching, cybersecurity, and do that for all our SaaS offerings. The specific application on top is the differentiator and creates the value for our customers. Take software engineering. Today, we have 30,000 software engineers. They use roughly, you won't believe it, 900 separate versions of software development tools. We plan to consolidate these into just a few dozen standardized tools. This will boost productivity. One industrial foundation model. I will talk about that later. Finally, number three, one sales fabric. Let me be clear here. For different markets, Siemens will still have different go-to markets. We address them through six sales organizations: for automation, buildings, electrical products, electrification and automation, for mobility, and for software. The important part, though, is all of these sales teams are using the same sales fabric. What does that mean?
Skills, a provider for inventory management reservation and ticketing software for our rail customers supply frame a platform that connects design and sourcing of electronic pumps brightly a provider for asset and maintenance solutions for buildings.
And in 2025, we closed the acquisitions of Altair and automatics.
Speaker #1: Siemens Healthineers serves markets which are increasingly different . They are different from the core markets of Siemens . For example , regulation in healthcare is comprehensive and increasing digitalization in the way that we do it Siemens today doesn't really scale into the healthcare sector at .
Yeah.
<unk> is now the world's most complete portfolio for AI powered design engineering and simulation.
Our customers can now built the most comprehensive comprehensive physics space digital twins.
Speaker #1: The plant deconsolidation will lead Siemens Healthineers to benefit from a significantly higher free float, creating a pure-play medtech champion that is more attractive for the capital markets.
And this is semantics, we are adding more than 5 billion to our addressed markets. Our customers can now built a digital thread all the way from R&D to production.
This humps them, bringing medicines and biochemicals to the market more quickly and at lower cost.
Speaker #1: So what happens now ? We intend to transfer 30% of shares to Siemens AG shareholders by a direct spin off , and as a minority shareholder , we will continue to participate in the attractive business of Siemens Healthineers in the medium term , we intend to reduce our shareholding financial to a asset The transactions needs .
Yeah.
No.
Nobody make another important steps towards a highly synergistic Siemens portfolio.
We plan to dig consolidate Siemens healthiness.
This will unlock long term value for all our shareholders because.
Speaker #1: Regulatory clarification and a green light from both shareholder meetings, and more details will follow in early Q2 calendar year 2026. And let me assure you, Siemens is committed to managing its investments in Siemens Healthineers in a responsible and shareholder-focused manner.
Roland Busch: Shared tools at lower cost, rigorously standardized, data-driven for full transparency, real-time, orchestrated by stringent account management, channel, and partner management. This means Siemens will sell with one digital marketplace, one sales toolset, one vertical approach. Just to give you a simple example, all six teams have started using one and the same digital identifier for customers. This increases transparency and visibility. We see now in real time and holistically what each customer wants and buys, but also we see what they do not buy yet from us. That's where we are unlocking more and more sales opportunities. Also, more standardization means less back-office work. In automation, for example, we are doubling the share of salespeople who carry a quota. In short, with greater transparency, we can allocate resources better, and this will help us grow faster. Now, where will growth come from?
It will allow both companies to fully into their respective growth potentials.
Siemens Hudson, Yes is a success story since its IPO. The company has grown from 13 billion euros and revenue in 2018 to 23 billion in 2025, and the Varian acquisition contributed approximately 4 billion took us.
Industry, leading margins.
Speaker #1: A new Siemens has taken shape . A company with less complexity and with simplified governance , with a fast growing digital business with an unmatched of portfolio industrial software and digital services and with a strong portfolio in hardware connected hardware that will be increasingly software defined and enhanced with AI .
Best in class product offering reliable cash flow high free cash flow conversion.
Our strong attractive business, but.
One with increasingly less and less synergies.
Siemens health and yourselves markets, which are increasingly different they are different from the core markets of Siemens for example regulation in health care is comprehensive and increasing digitalization and the way that we do it at Siemens today doesn't really scale until the health care sector.
Speaker #1: In short , a Siemens with a highly synergistic portfolio ready to scale . Portfolio matters . But there's more our to fabric than the mix of our businesses .
So the plant deconsolidation, Siemens Hudson yards will benefit from a significantly higher free float.
Speaker #1: When we say we are changing our fabric , then we also mean we are improving our operating model . Remember , stronger customer focus , faster innovations , higher profitable growth .
A leading.
Pure play Metrotech champion more attractive for the capital market.
Roland Busch: First of all, we are in a good place because we are offering what the world needs. We are positioned along secular growth drivers: automation, digitalization, electrification, sustainability, and artificial intelligence, AI for the real world. Let's have a look at our markets. Our addressed markets grow at approximately 6% per year on average, and in five years' time, this adds up to a total addressable market of EUR 650 billion. The digital markets therein grow much faster by 11% to EUR 175 billion by 2030. In addition to this, we are tapping into expansions of our total addressable market. They are adding up to EUR 50 billion in fiscal year 2025, but we expect them to grow between 14% and 18% per year on average until 2030. These are very attractive growth areas for us.
So what happens now.
Speaker #1: A strong Siemens has a company rich with history, but this means legacy systems, leading to many silos. For example, ERP systems still exist in multiple forms.
We intent to transfer 30% of shares to Siemens AG shareholders.
By a direct spin off.
Speaker #1: For example , data silos . Every single bit of this legacy made sense . At a certain point in time . But times have changed .
And as a minority shareholder we will continue to participate in the attractive business of Siemens health centers and.
In the medium term, we intend to reduce our shareholding to a financial asset.
Speaker #1: The world has become more competitive . Companies need to be more resilient . Scale matters more and more more and . Speed more matters .
The transaction still needs regulatory clarification in the Green light from both shareholder meetings and.
Speaker #1: We are giving business our an efficient , environment so they optimal can focus so they can innovate They can serve our faster . customers better .
And more details will follow in early Q2 calendar year 'twenty 'twenty six.
Speaker #1: And that's how our new operating model is all about . We are building and out rolling services for all of our , highly businesses , delivered efficient in highly ways , always up to date with the latest and at world class technology quality for everyone Siemens and at to scale .
Let me assure you.
Siemens is committed to.
To managing its investments and Siemens health and is in a responsible and shareholder focused manner.
Our new Siemens has taken shape our company.
With less complexity and with simplified governance.
Speaker #1: We do that. We do that because the world is squeezing small digital tools. Allow us to use economies of scale in every possible way.
With a fast growing digital business.
With an unmatched portfolio of industrial software and digital services and.
Roland Busch: They include new AI applications and products, AI factory capabilities, life science software, just to name some examples. We are able to address these markets organically, and we will, of course, also evaluate opportunities for either partnerships or acquisitions. In short, our addressed markets are growing, and we are addressing market expansions, which are even growing faster. Siemens is accelerating its growth. At our capital market day 2019, we said 4% to 5%, we delivered. At our capital market day in 2021, we said 5% to 7%, we delivered. Again, here is our new midterm ambition: 6% to 9% comparable revenue growth. This is our expectation only for our existing portfolio, excluding Siemens Healthineers. Any growth from total addressable market expansions is not reflected in this ambition. Of course, we aspire not just growth, but profitable growth, growth that translates into strong earnings per share.
With a strong portfolio in hardware connected hardware that will be increasingly software defined and enhanced with AI.
Speaker #1: way data Scale , scale matters for AI . Scale matters when you want to a powerful be partner in a global ecosystem . And that's why we are creating one data fabric , one technology fabric and one sales fabric for all Siemens .
And shot.
Siemens with a highly synergistic portfolio ready to scale.
Portfolio matters.
But there's more to our fabric than the mix of our businesses.
When we say we are changing our fabric then they also mean, we are improving our operating model remember stronger customer focus faster innovations higher profitable growth.
Speaker #1: Let's look at these fabrics one by one to see how they can help our businesses grow faster. Let's start with one data fabric for all of Siemens.
Siemens is a strong company, which with a rich history, but this means legacy too.
Speaker #1: We are tearing down walls bring and data where belongs . Together . One ERP one CRM system , system , one data layer for internal data for customer data , for external data , all connected available real time .
Too many systems for example, ERP systems still many silos for example data silos.
Every single bit of this legacy made sense at a certain point in time.
<unk> has changed the bolt has become more competitive companies need to be more resilient scale matters more and more speed matters more and more.
Speaker #1: Today, our customers can already use 250 data products. With our data, we are feeding our AI models because scale matters to our customers.
We are giving our business.
Speaker #1: And partners want to connect into our data fabric. We started with the machine tool industry. Seven companies joined an alliance to pull data, and here is what our partners have to say.
And efficient optimal environment. So they can focus so they can innovate faster they can serve our customers better.
And that's.
Our new operating model is all about we are building and rolling out services for all of our businesses.
Roland Busch: Our midterm ambition here is EPS per share, pre-PPA, high single-digit increase. Now, let's zoom in for a moment and look at actual growth levers for growth. What are we doing strongly to tap into our growth markets and our growth opportunities? There are four big levers: Grow digital, Grow regions, Grow vertical, and Grow AI. We take them again one by one. First, Grow digital. In 2021, we had committed to an average annual growth rate of 10% for our digital businesses, which consists of software, IoT, digital services, and consulting services. We delivered. Our digital business grew by 12% and reached EUR 9.4 billion in 2025, including acquisitions. Now, we expect our growth to increase further, 15% on average per year, over the next five years. This means we expect this part of our business to double in revenue by 2030. How?
Highly standardized deliberate and highly efficient ways always up to date with the latest technology and at World class quality for everyone and it's Siemens to escape.
Speaker #2: We that only secure believe and scalable data collaboration , unlocking the full potential , especially for industrial AI in manufacturing and production . By joining forces with industry leaders , we aim to accelerate innovation , improve efficiency and shape the future towards a data driven production .
We do that.
We do that because the board is squeezing out small.
Digital tools allow us to use our economies of scale in every possible way.
Speaker #2: Yeah, for that need, you, but to come to a joint model, to a joint sharing of data between the different processes.
Scale matters for data scale matters for AI scale matters, when you want to be a powerful partner.
Speaker #2: This is the reason why we said we need to join that bring alliance to gather all that data, enhance the data AI to come up with the next big jump in productivity for our customers.
In a global ecosystem.
And that's why we equate Inc.
One data fabric.
One technology fabric.
And one sales fabric for whole Siemens.
Speaker #1: So one data fabric next is one technology fabric. This means technologies and services which are essential for our businesses' success. We built them once for everyone, needed at a world-class level.
Let's look at these fabrics, one by one to see how they can help our businesses grow faster let's.
Start with one data fabric for all of Siemens.
Speaker #1: One set of technology building blocks . Take for example , our as a service business . We can create the supporting infrastructure once for log distributing , patching , cybersecurity and do that for all our SaaS offerings .
We're tearing down walls and bring data where it belongs.
Together.
One ERP system, one CRM system, one data layer for internal data for customer data for external data all connected available real time.
Speaker #1: The specific application on top are the differentiator and create the value for our customers . Or take software engineering . Today we have 30,000 software use engineers .
Today, all our customers.
Roland Busch: How do we grow in this area? Of course, software is a big part of this, and especially recurring revenue from software as a service. Take our successful SaaS business in digital industries. We grew the annual recurring revenue with an average growth rate of 13% year over year to now EUR 5.3 billion. All in all, for our SaaS business model in PLM, we won 24,000 customers. Seven out of 10 are new customers. Almost nine out of 10 are small and medium enterprises. For many of these smaller companies, this easier, faster access makes them choose Siemens Software actually for the first time. There is Siemens Accelerator, our open digital business platform. It helps us reach small and medium-sized enterprises through our marketplace, and, of course, with SaaS offerings. It helps us to sell more effectively into verticals, and to tailor offerings through digital threads.
Can already use 250 data products and with our data we are feeding our AI models.
And because scale matters, our customers and partners want to connect into our data fabric, we started with machine tool industry.
Speaker #1: roughly . You They won't believe it . 900 separate versions of software development tools . We plan to consolidate these into just a few dozen of standardized tools .
Seven companies joined an alliance to pool data and here is what our partners have to say.
Speaker #1: This will boost productivity and one industrial foundation model . And I will talk about that later . Finally , number three . One sales fabric .
We believe that the only secure.
And scalable data collaboration unlocking the full potential, especially for industrial and.
Speaker #1: be clear Let me here for different markets , Siemens will still have different go to markets . We address them through six sales organizations for automation buildings , electrical products , electrification and automation for mobility and for software .
In manufacturing and production.
By joining forces with industry leaders.
We aim to accelerate innovation.
Improved efficiency and shape the future towards a data driven production.
But for that you.
You need to come to a joint model to a joint sharing of data between the different processes and this is the reason why we said we need to join that alliance to bring together all their dotcom enhance the doctor with AI to come up with the next big jump in productivity for our customers.
Speaker #1: The important part , though , is all of these sales teams are using the same sales fabric . What does that mean ? Shared tools at lower cost , rigorously standardized , data driven for full transparency , real time , orchestrated by stringent account management channel and partner management .
Roland Busch: Here are five examples for how it is gaining market traction. First, manufacturing. Industrial Operations X. In one of their plants, Audi replaced physical controllers with virtual controllers from Siemens. The result: more flexibility, higher speed, lower cost. Audi will roll this out now to all their factories. Currently, we are evaluating with the virtual POC with half a dozen of further customers. Building X. We help to lower operations cost, which are the lion's share of buildings' cost. With data-driven optimization, customers can save up to 30% of energy and generate up to 10% more operating income. Signaling X, which is interlocking in the cloud. Instead of physical signs at the side of the track, we offer virtual signaling in the cloud. We have done this for Norway, Finland, Austria, and Barcelona.
So one data fabric next this one technology fabric this meets technologies and services, which our businesses need for their success.
Speaker #1: This means Siemens will sell with one digital marketplace , one sales tool set , one vertical approach . And just to give you a simple example , all started six teams have using one at the same digital identifier for customers .
We built them once for everyone at.
At volt class level, one set of technology building blocks take for example, our software as a service business.
We can create the supporting infrastructure.
Speaker #1: This increases transparency and visibility. We see real insights now into what each customer wants and buys. But we also see what they do not buy yet from us.
Once for logging distributed patching cybersecurity.
And do that for all our sauce offerings. This specific application on top are the differentiator and create the value for our customers.
Speaker #1: That's where we are unlocking more and more sales opportunities more . Also standardization means less back office work in automation . For example , we are doubling the share of salespeople who carry a quota .
Or take software engineering today, we have 30000 software engineers. They use roughly you won't believe it 900 separate versions of software development tools, we plan to consolidate these into just a few dozen of standardized tools. This will boost productivity.
Speaker #1: In Q4, with greater transparency, we can allocate resources better, and this will help us grow faster. So now, where will growth come from?
And.
Roland Busch: Yesterday, we announced that this will be also working for mass transit in Singapore. It scales. Grid Scale X. Many electricity grids are at their limits, and thanks to our software products, grid operators can increase their capacities up by 30% without upgrading hardware or existing hardware. The last example is Teamcenter X. We launched the digital reality viewer. What is that? Running in on Siemens Accelerator and powered by NVIDIA, Omniverse, and GPUs, it lets customers explore complex products, photorealistic and in 3D, to speed up collaboration. The next level will bring one unified, immersive, and highly realistic digital twin to factories. Foxconn, one of the largest contract manufacturers in the world, will be the first user. Foxconn is building a state-of-the-art robotic facility for manufacturing NVIDIA AI infrastructure systems.
One industrial Foundation model and I will talk about that later.
And finally number three one sales fabric.
Speaker #1: First of all , we are in a good place because we are offering what the world needs . And we are positioned along secular growth drivers , automation , digitalization , electrification , sustainability and artificial intelligence .
Let me be clear here.
For different markets Siemens will still have different go to markets, we address them through six sales organizations.
For automation built.
Buildings.
Electrical products.
Electrification and automation.
For mobility and for software.
Speaker #1: AI for the real world. Let's have a look at our markets. Our addressable markets grow at approximately 6% per year on average.
The important part though is all of these sales teams are using the same sales fabric what does that mean.
<unk> tools at lower cost.
Rigorously standardized data driven for full transparency real time orchestrated by stringent account management channel and partner management.
Speaker #1: And in five years' time, this adds up to a total addressable market of €650 billion. The digital markets therein grow much faster, by 11%, to €175 billion by 2030.
This means Siemens will sell with one digital marketplace.
One sales tool set one vertical approach.
Speaker #1: Now, in addition to this, we are tapping into expansions of our total addressable market. They are adding up to $50 billion in fiscal year '25.
And just to give you a simple example, or six teams had started using wanted the same digital identifier for customers.
Roland Busch: With labor shortages and skills gaps, digitalization, robotics, and physical AI are more important than ever. The factory is born digital in Omniverse. Foxconn engineers assemble their virtual factory in a Siemens digital twin solution developed on Omniverse technologies. Every system, mechanical, electrical, plumbing, is validated before construction. Siemens Plant Simulation runs design space exploration optimizations to identify ideal layout. When a bottleneck appears, engineers update the layout with changes managed by Siemens Teamcenter. This brings us to lever two, Grow regions. Siemens is both a global and a local company at the same time. We are present almost everywhere on the planet, and we grow where markets are growing and where markets grow particularly fast. We double down increasingly on our investments. The focus countries for us are the United States, China, and India. This broad footprint also increases our resilience.
This increases transparency and visibility we see now in real time, and Holistically, what each customer wants and buys but also we see what they do not buy yet from us that's where we are unlocking more and more sales opportunities.
Speaker #1: But we expect them to grow between 14% and 18% per year on average until 2030. These are very attractive growth areas for us.
Speaker #1: include They new AI applications and products , AI factory capabilities , life science software , just to name some . Some examples . And we are able to address these markets organically .
Also most under the session beans, less back office work.
In automation for example.
We are doubling the share of salespeople, who carry a quota.
Speaker #1: The will of And we, of course, also allow it opportunities for either partnerships or acquisitions. In short, our addressed markets are growing, and we are addressing market expansions that are growing even faster.
In short.
With greater transparency, we can allocate resources better and this will help us grow faster.
So now where will growth come from.
Speaker #1: Siemens is accelerating its growth. At our Capital Market Day 2019, we said 4% to 5%. We delivered at our Capital Market Day in 2021.
First of all we are in a good place because we are offering what the board meets.
And we are positioned along secular growth drivers automation.
Speaker #1: We said 5 to 7% . We delivered again and here is our mid-term ambition , revenue 6 to 9% comparable growth . is This our expectation only for our existing portfolio , excluding Siemens Healthineers , any growth total addressable from market expansions is not in reflected this ambition .
Digitalization electrification sustainability and.
Artificial intelligence AI for the real votes.
Let's have a look at our markets.
Our addressed markets grow at approximately 6% per year on average and in five Years' time. This adds up to a total addressable market of 650 billion euros.
Roland Busch: When tariffs or trade restrictions come up, we can buffer their impact for us. Most of our competitors cannot. This supports our growth relative to the market. Here is the CAGR for our addressable markets over the next five years in these three regions: United States, about 6%; China, nearly 4%; India, more than 7%. These figures, by the way, exclude the health and youth market. Here is now how Siemens fits into their respective growth stories. The United States wants to strengthen its critical infrastructure, reshore manufacturing, and keep boosting its AI capabilities. We invested nearly EUR 1 billion in the United States in the last two years. This includes an expansion of our local footprint in manufacturing for electrical products. We are transforming public transport with the first high-speed link between Los Angeles and the Las Vegas area with locally manufactured trains.
Speaker #1: And of course, we aspire not just to growth, but to profitable growth. Growth that translates into strong earnings per share. Our mid-term ambition here is an EPS high single-digit increase.
The digital markets there in gross much faster by 11% to 175 billion euros by 2030.
Now in addition to this we are tapping into expansions of our total addressable market.
Speaker #1: Now, let's zoom in for a moment and look at actual growth levers for growth. What are we doing to tap into strong growth markets and our growth opportunities?
They are adding up to 50 billion in fiscal year, 'twenty, five, but we expect them to grow between 14 and 18% per year and average until 2030.
Speaker #1: And there are four big levers: grow digital, grow regions, grow vertical, and grow AI. We take them again, one by one.
It is a very attractive growth areas for us. They include new AI applications and products I factory capabilities life Science software just to name some except some examples.
We are able to address these markets organically.
Speaker #1: First , grow digital in 20 2021 . In 21 , we had committed to an average annual growth rate of 10% for our digital businesses , which consists of software , IoT and digital services and consulting services .
And we will of course also elevate opportunities for either partnerships or acquisitions.
In short.
Our addressed markets are growing and we are addressing market expansions, which are even growing faster.
Roland Busch: We are a partner for hyperscalers and their massive build-out of data centers. More on this in the deep dives later. We are offering software for production optimization for the needs of small and medium-sized enterprises. It can enhance their shop floor performance by 30%. Let's move to China. China is moving up the value chain with high-tech manufacturing, building out its digital infrastructure, and the country wants to strengthen its position as a global leader in AI. We keep providing high-end automation in China, but we also started building value products for the local market: specified locally, manufactured globally, developed locally, and sold locally, and that with China's speed. In the last year, we have seen 18 new automation products, and we have more than 20 new products in the pipeline for the next year.
Speaker #1: And we delivered; our digital business grew by 12% and reached €9.4 billion in 2025, including acquisitions. Now we expect our growth to increase further by 15% on average per year over the next five years.
Siemens is accelerating.
It's growth.
At our capital market Day, 2019, we said, 4% to 5% we delivered.
At our capital market day in 2020, one, we said 5% to 7% we delivered.
Speaker #1: This means we expect this part of our business to double in revenue by 2030. How do we grow in this area?
And here is our new mid term ambition.
6% to 9% comparable revenue growth. This is our expectation only for our existing portfolio, excluding Siemens Hoffman, yes.
Speaker #1: course , software Of is a big part of this , and especially recurring revenue from software as a service . Take our successful SaaS business and digital industries .
Any growth from total addressable market expansions is not reflected in this ambition.
Speaker #1: We grew the annual recurring revenue with an average growth rate of 13% over year over year to now €5.3 billion . All in all , for our SaaS business model in PLM , we won 24,000 customers , seven out of ten are new customers , almost nine out of ten are small and medium enterprises .
And of course, we aspire not just growth, but profitable growth growth that translates into strong earnings per share and.
And our midterm ambition here is.
EPS per share pre PPA high single digit increase now.
Roland Busch: We see great potential for Siemens Accelerator in the Chinese market: more than half a million registered users in China, and over 400 offerings by now. India wants to boost domestic and export-oriented manufacturing, and the country is rapidly building up their AI infrastructure and rail infrastructure across the whole country. Siemens is upgrading the country's transportation sector. Recently, we started full production of our locally manufactured electric locomotives. 1,200 are on order, including a 35-year full-service maintenance contract. This is a EUR 3 billion contract in total. We bought C&S Electric, a local manufacturer for low-voltage equipment. They have been growing with a CAGR of 20%. For medium voltage, we started manufacturing the environmentally friendly gas-insulated switchgear in India as well. This is, by the way, very much recognized. We were awarded Best Multinational Company of the Year in 2025.
Let's assume in for a moment and look actual growth lever for growth. What are we all be doing strongly to tap into our growth markets and our growth opportunities and they are four big leave us.
Speaker #1: And for many of these smaller companies , this is faster access makes them choose Siemens software . Actually , for the first time .
Speaker #1: There is the Siemens Accelerator, our open digital business platform. It helps us reach small and medium-sized enterprises through our marketplace.
Grow digital.
Girl regions.
Global article.
And grow.
Speaker #1: And of course, with SARS offerings, it helps us to sell more effectively into verticals and to tailor offerings through digital threads.
We take them again, one by one first grow digital.
In 'twenty to 2021 'twenty, one that we had committed to an average annual growth rate of 10% for our digital businesses.
Speaker #1: Here are five examples for how it is gaining market traction . First , manufacturing , industrial operations is in one of their plans , Audi replaced physical controllers with virtual from controllers Siemens , the result more flexibility , higher speed , lower cost .
Which consists of software Iot and digital services and consulting services and we delivered.
Our digital business grew by 12% and reached $9 4 billion euros in 2025.
Including acquisitions.
Speaker #1: Audi will roll this out now to all their factories. Currently, we are evaluating with the virtual PLC with half a dozen further customers.
Now we expect our growth.
To increase further 15% on average per year over the next five years. This means.
We expect this part of our business.
Roland Busch: Yes, there are opportunities in Europe too. We continue to invest in Germany for its world-class industrial ecosystem, strong small and medium-sized companies, and outstanding talent and research. We invested EUR 250 million to upgrade Europe's most modern train factory in Munich. We have started building our EUR 500 million technology campus in Erlangen, which will bring the industrial metaverse to life. Lever number three: Grow verticals. Verticals are becoming more important for Siemens because our new fabric allows us to serve them even better. In verticals, and this is important, what we can do, since this is a smaller view on a market, we identify recurring customer problems, and we resolve them in repeatable offerings. In other words, this is another great potential to scale. Here is the expected market CAGR for five verticals, growth verticals over the next five years: rail transportation, 5%; aerospace and defense, 9%.
Speaker #1: Building X we help to lower costs operations , costs which are the lion's share of buildings cost with data driven optimization . Customers can save up to 30% of energy and generate up to 10% more operating income , signaling X , which is interlocking in the cloud instead of physical signs at the side of the track .
To double in revenue by 2030.
Uh huh.
How how do we grow in this area.
Of course software is a big part of us and especially recurring revenue from software as a service take our successful SaaS business in digital industries. We grew the annual recurring revenue with an average growth rate of 13% over year over year to now 5.3 billion euros or.
Speaker #1: We offer virtual signaling in the cloud , and we have done this for Norway , for Finland , for Austria , for Barcelona , and yesterday we announced that this will also be working for mass transit in Singapore .
All in all for our SaaS business model in pill, and we won 24000 customers seven out of 10 on new customers.
Almost nine out of 10 are small and medium enterprises.
Speaker #1: It scales grid scale X. Many electricity grids are at their limits, and thanks to our software products, grid operators can increase their capacities by up to 30% without upgrading hardware or existing hardware.
And for many of these smaller companies this easier faster access makes them choose Siemens software actually for the first time.
And there is Siemens accelerator, our open digital business platform. It helps us reach small and medium sized enterprises through our marketplace and of course with sauce offerings. It helps us to sell more effectively into verticals.
Speaker #1: And the last example is Teamcenter X. We launched the Digital Reality Viewer. Now, what is that running on? It's on Siemens Xcelerator and powered by NVIDIA Omniverse and GPUs.
And to tailor offerings through digital threads.
Speaker #1: It lets customers explore products , photorealistic and in 3D to speed up collaboration . And the next level will bring one unified , immersive and highly realistic digital twin to factories .
Here are five examples for how it is gaining market traction.
First manufacturing.
Roland Busch: Life science, 9%. Semiconductors, 10%. Data centers and AI, 11%. Our target is to consistently grow faster than these respective markets. A bit more on the five verticals I just mentioned. Let's start with data centers. Our revenue has increased to EUR 2.9 billion with a growth in 2025 of 40%. Our customers are building the next generation of data centers now through AI factories: larger, denser, higher energy intensity. Through this vertical, we bring everything we already have to offer, and we are developing new offerings too, from advanced building management, automation with POCs, DC switching for efficient power, and, of course, a full digital twin simulation all the way from the chip to the buildings. Life science. Nine out of 12 top pharma companies rely on both smart infrastructure and digital industry offerings, and we integrate what they typically need.
Industrial operations ex.
And one of their plants o'dea replace physical controllers with Wetzel controllers from Siemens the result, more flexibility higher speed lower cost.
Speaker #1: And Foxconn, one of the largest contract manufacturers in the world, will be the first user.
Audi we'll roll this out now to all their factories.
Speaker #3: Foxconn is building a state of the art robotic facility for manufacturing Nvidia AI infrastructure systems , with labor shortages and skills gaps , digitalization , robotics and physical AI are more important than ever .
Currently we are relating with the virtual POC with Harvard dozens of further customers.
Building X.
We helped to lower cost operations costs, which are the lion's share of buildings cost with data driven optimization customers can save up to 30% of energy and generate up to 10% more operating income.
Speaker #3: The factory is born digital in Omniverse. Foxconn engineers assemble their virtual factory in a Siemens digital twin solution developed on Omniverse technologies.
Signaling X, which is interlock, inc. In the cloud instead of physical signs at the side of the track.
Speaker #3: Every mechanical, electrical, and plumbing system is validated before construction. Siemens Plant Simulation runs design space exploration optimizations to identify the ideal layout when a bottleneck appears. Engineers update the layout with changes managed by Siemens Teamcenter.
Author Wetzel signaling in the cloud and we have done this for Norway, Finland for Austria for Barcelona, and yesterday, we announced that this will be also working for mass transit and Singapore.
It scales.
Grits calix, many electricity grids are at the limits and thanks to our softer products grid operators can increase their capacities up by 230% without upgrading hardware.
Speaker #1: Which brings us to lever two . Grow regions . Siemens is both a global and a local company . At the same time , we are present almost everywhere on the planet and we grow where markets are growing and and where markets grow particularly fast .
Roland Busch: With Dotmatics, we expand into software for their R&D processes. Rail transportation. We are technology leaders in many areas, including rolling stock, signaling, you heard about it, and the cloud and AI-based predictive maintenance. Our ability to support with financing solutions is an additional advantage for us. In the rail transportation market, we expect to benefit also from government stimulus programs. We will take a deep dive on these three verticals in the afternoon. By the way, we have an exhibition there, which you might want to enjoy, and there are some experts who love to show their products to you. Let me share a bit more on the following two: aerospace, defense, and semiconductors. In aerospace, we support our partners use fewer resources, and we help them to develop more sustainable aircraft. 95% of the world's aircraft engines are developed and manufactured with Siemens software.
Our existing hot there.
And the last example is teams centre ex.
We launched the digital reality viewer.
Speaker #1: We double down increasingly on our investments, focusing on the United States, China, and India. This strategy also increases our footprint and enhances our resilience.
Matt.
Running an unseen is accelerator and powered by Nvidia OMNOVA.
<unk> and Gpus, it lets customers explore complex products photolithography and in three D to speed up collaboration and the next level will bring one unified immersive.
Speaker #1: when So tariffs or trade restrictions come up , can we bother their impact . For , most us of our competitors cannot . This supports our growth to the relative market .
And highly realistic digital twin two factories.
Speaker #1: here's the And kegger for our addressable market over the next five years . In these three regions , United States , about 6% , China , nearly four , India than seven .
And Fox Con.
Financials contract manufacturers in the world will be the first user.
Fox Con is building a state of the art robotic facility for manufacturing Nvidia AI infrastructure systems.
Speaker #1: These figures , by the way , exclude the Healthineers market . And here is now how Siemens fits into their growth respective stories .
With labor shortages and skills gaps digitalization robotics, and physical AI are more important than ever.
Yes.
The factory is born digital.
Roland Busch: 90% of satellites in orbit have been developed with Siemens software. Defense budgets are growing globally with a CAGR of approximately 7% between 2025 and 2030. We have been a trusted technology partner for this industry for a very, very long time. Semiconductors. Globally, semiconductor companies plan to invest about $1 trillion through 2030 in new fabrication plants. 29 out of 30 semiconductor companies rely on Siemens technology. Two examples. Our automation and design software enables the production of 2-nanometer chips. We offer high-precision building technologies for clean rooms. Now, lever number four: Grow AI. More specifically, we talk about industrial AI. This is not really new to Siemens. We have been developing AI-based tools and products for more than 50 years. Today, we have 1,500 AI experts all around the world.
Speaker #1: The United States wants to strengthen its critical infrastructure Reshore manufacturing and keep AI boosting its capabilities . We invested nearly United States 1 billion in the in the years .
In omnivores.
Fox Con engineers assemble their virtual factory in a Siemens digital twin solution developed an omnivorous technologies every system.
Speaker #1: last two an This expansion of local our footprint in for electrical manufacturing products . We are public transforming transport with the first high speed link between Los Angeles and the Las area , locally with manufactured trains .
Cancel electrical plumbing is validated before construction.
Siemens plant simulation runs design space exploration optimizations.
Two identify ideal layout.
Yes.
When a bottleneck appears engineers update the Leon.
Speaker #1: We are partnering with hyperscalers and their massive build-out of data centers. In this deep dive, more on that later, we are offering optimization for software to meet the production needs of small to medium-sized IT enterprises.
With changes managing my Siemens team Center.
Which brings us to lever to grow regions seamless, it's both a global and our local company at the same time, we are present almost everywhere on the planet.
Speaker #1: floor their performance enhance shop by Let's move to China is moving up the value chain with high tech 30% . manufacturing , building digital infrastructure , and the country wants out its to strengthen China .
B Groh, where our markets are growing and their markets grow, particularly fast with double down increasingly our investments.
The focus countries for us.
Speaker #1: as a global its . We keep leader in providing high end automation in China , but we also started building value AI products for the local market specified manufactured , locally locally locally and locally sold that with China developed , speed in the last year we have seen 18 new automation .
The United States, China and India.
This broad footprint also increases our resilience so in tariffs or trade restrictions come up we can buzzer there impact for us most of our competitors cannot this supports our growth relative to the market.
Roland Busch: We use AI in three big ways: to boost innovation and productivity, to enhance our products, and we are also building our own new AI offerings. Let's take them one by one. AI to boost our innovation speed and our productivity. We are using applications from Google for AI-powered improvement of our code, for example, for software-defined automation. This is really genuine code programming. The same tools help us dramatically speed up our bids for complex projects, train projects, for example. We can shorten tender application from weeks to hours. Secondly, powering our existing products with AI. Today, we have 38 AI offerings, and the number keeps growing. Two examples: AI that finds the best production path for machine tools. This will be possible thanks to our data alliance with the machine tool industry we talked about. We use Anthropic model Claude to refactor our own software.
Speaker #1: We see great potential for Siemens to accelerate in the Chinese market this year, and we have more products in the pipeline for the next products.
And here's the CAGR for our addressable markets over the next five years in these three regions the United States.
About 6%.
China, nearly four India more than seven.
Speaker #1: More than 20 new users in over 400 offerings by , India India wants to boost now export China oriented manufacturing , domestic and is and the rapidly building up the AI infrastructure and rail whole infrastructure across the .
These figures by the way exclude the health in this market.
And he is now.
How it Siemens fits into their respective growth stories, the United States wants to strengthen its critical infrastructure.
<unk> manufacturing and keep boosting its AI capabilities.
Speaker #1: Siemens is upgrading the country's transportation sector. Recently, we started a full order for our locally manufactured electric locomotives, including a full-service maintenance contract for 35 years.
We invested nearly $1 billion in the United States in the last two years. This includes an expansion of our local footprint in manufacturing for electrical products.
Speaker #1: a a 3 billion contract is in 1200 are on CNS bought This electric , a local manufacturer , voltage low equipment have been .
We are transforming public transport with the first high speed link between Los Angeles, and the Las Vegas area with locally manufactured trains we are partner for Hyperscale us and their massive build out of data centers.
Roland Busch: In simple terms, AI cleans up and simplifies code. This makes both our software and the hardware it connects faster and more performant. Concrete benefits for our PR portal software: customers profit from updates faster and with higher quality. Third, we are building new AI products. Siemens is developing an industrial foundation model. With our domain know-how, and with the vast industrial data we have, including those from our partners, this model will speak the language of engineers. It will ingest any kind of industrial data. We are working also on AI agents for industrial agents that plan, think, use tools, and cooperate with humans to achieve clear goals. We are doing this with our partner, AWS. Our award-winning Industrial Copilot is already used by a number of customers. It offers up to 30% higher productivity in factories, and we developed it together with Microsoft.
Speaker #1: We started manufacturing environmentally friendly, insulated voltage switchgear in India. The CAGR (Compound Annual Growth Rate) is 20%, and we were very much recognized and awarded for this initiative.
More on this in the deep dives later.
We are offering software for production optimization for the needs of small and medium sized enterprises. It can enhance their shop floor performance by 30%.
Speaker #1: We, the 2025, and the way, yes, the best in Europe, are to continue to invest in industrial Germany for the world. The opportunities are significant.
Let's move to China, China is moving up the value chain with high Tech manufacturing building out its digital infrastructure in the country wants to strengthen its position as a global leader in L. A we kept providing high end automation in China, but we also started building value prop.
Speaker #1: Class Strong, small and medium companies ecosystem outstanding and talent sized and invested €215 million to upgrade Europe's train factory modern in, and we.
For the local market.
Specified locally.
Speaker #1: We is important can what we do . And this Since this is a smaller few on our market , we them , identify recurring customer problems and we resolve them in repeatable offerings .
A manufacturer globally developed locally and solve locally and that this China's speed in the last year, we have seen 18, new automation products and we have more than 20, new products in the pipeline for the next year.
Speaker #1: started building our 500 million technology campus Erlangen , in which will research bring the industrial life . metaverse to number three Lever . Verticals are Siemens becoming more because our new serve us to allows even fabric better in important for verticals .
We see great potential for Siemens accelerates in the Chinese market more than half a million registered users in China and over 400 offerings by now.
Roland Busch: For the AI opportunity, we strengthened our team with Wasif Filomen. He joined us a few months back from AWS. You will get to know him later in the breakouts. He is scaling an AI development center in Seattle, connected to our AI and domain experts all over the world. This is super important: bring domain know-how and AI and data together. In the next three years, we will invest more than EUR 1 billion in our AI capability and offerings. We will work even closer with our partners. Don't mix up EUR 1 billion with hundreds of billions in data centers. This is not investment in infrastructure. This is making this infrastructure work for the industrial AI. This is where this EUR 1 billion goes. Now, one example: NVIDIA. Jensen Huang, their CEO, sent us this video message. Enjoy. It takes approximately three minutes.
India.
India wants to boost domestic and export oriented metal manufacturing in the country is rapidly building up the infrastructure and rail infrastructure across the whole country.
Siemens is upgrading the country's transportation sector recently.
We started full production of our locally manufactured electric locomotives 1002, hundreds are on order, including a 35 years full service maintenance contract. This is a 3 billion contract in total.
Speaker #1: In other this is words , great . Here potential to is another market scale . KKR the for five verticals growth verticals over the five years next .
Speaker #1: Rail 5% . Aerospace and defense 9% . Life transportation Semiconductors centers and . data Tenant AI Our 11% . is consistently grow faster these to respective than markets target A bit more on .
We bought CNS electric a local manufacturer for low voltage equipment.
They have been growing with a CAGR of 20%.
And for our medium voltage we started manufacturing the environmentally friendly gas insulated switch gear in India as well.
Speaker #1: The five verticals I just mentioned. Let's start with centers. Our revenue data increased by €2.9 billion, with a growth in customers building up to 40% by 2025.
And this is by the way very much recognized we were awarded best multinational company of the year in 2025.
And yes, there are opportunities in Europe too.
We continue to invest in Germany for its world class industrial ecosystem.
Roland Busch: Thank you, Roland, and our Siemens friends, for the invitation to join you on your Capital Market Day. Siemens is one of the world's great technology companies. Over 150 years ago, you ignited the first industrial revolution. Siemens Dynamo transformed motion into electricity, lighting up cities, powering machines, and electrifying the modern age. Today, Siemens builds the systems that power our industries and move our world. Once again, we stand at the beginning of a new industrial revolution: AI. AI is amazing technology. It will transform every application in every industry, and introduce new ones. AI is also infrastructure. It demands a new kind of factory: factories that manufacture intelligence. Every company will use it. Every nation will build it. Now, every company will have two factories: one that produces things, and one that produces the intelligence that drives them.
Speaker #1: generation of Our data are centers next through AI factories . Larger , denser energy intensity . Through this we bring vertical , everything we already have , higher to offer developing , and we are to offerings advanced new from management automation with PLCs , DC switching for efficient power , and of course , a full digital twin simulation all the way from to the the chip .
Strong small and medium sized companies and outstanding talent and research.
We invested 215 15 million euros to upgrade Europe's most modern trade factory in Munich.
And we haven't started building our 500 million technology campus in Atlanta in which will bring the industrial meters to life.
Lever number three.
Speaker #1: In the life sciences sector, nine out of the twelve top pharmaceutical companies rely on both smart infrastructure and digital industry offerings. We integrate what they typically need, dogmatically, and we expand into software for their R&D processes. Meanwhile, in transportation, we are technology leaders in many areas, including rolling stock signaling.
Grow verticals.
Verticals are becoming more important for Siemens because our new fabric allows us to serve them even better.
In verticals and this is important what we can do things as a smaller few on our markets, we identify recurring customer problems.
And we resolve them in repeatable offerings in other words. This is another great potential to scale here is the expected market take a CAGR for five verticals growth verticals over the next five years.
Speaker #1: You heard about it, and the cloud and AI-based predictive capabilities. Our ability to support maintenance financing solutions is an additional advantage for us in the transportation market.
Speaker #1: We expect to benefit from government stimulus programs in rail, and we will take a deep dive into these three verticals in the afternoon.
Great transportation, 5% Aerospace and defense nine person knife science, 9% semiconductors tenant.
Roland Busch: AI factories is the infrastructure for the age of AI. Our partnership with Siemens spans every layer of this transformation. We are doing so much together. Siemens helps us build NVIDIA products, and together, we help build for the world. NVIDIA engineers build Blackwell, the world's most advanced platform for accelerated computing and AI, with Siemens EDA software accelerated by CUDA-X. Blackwell is the computation engine of AI factories, and Siemens smart infrastructure is the power behind it. Over 100 gigawatts of AI factories will be built before the end of the decade. These are new Siemens opportunities. We're transforming how engineers design, simulate, and validate everything they build. Siemens CAE tools, accelerated by NVIDIA CUDA-X and PhysX Nemo, deliver massive speed-ups to fluid dynamics, structural mechanics, and electromagnetic simulations. What once took weeks now happens in minutes or even real time.
Data center and AI, 11%.
Speaker #1: By the way, we have an exhibition there which you might want to enjoy. We also have some experts who are eager to showcase their products to you.
Our target is to consistently grow faster than these respective markets.
Speaker #1: So let me share a bit more on the following two areas: aerospace, defense, and semiconductors. In aerospace, we support our partners in using fewer resources, and we help them to develop more sustainable aircraft.
A bit more on the five verticals I just mentioned, let's start with data centers.
Our revenue has increased to $2 9 billion euros with the growth in 2025 of 40% our customers are building. The next generation of data centers now true AI factories.
Speaker #1: Ninety-five percent of the world's aircraft engines are developed and manufactured with Siemens software. Ninety percent of satellites in orbit have been developed with Siemens software.
Larger denser higher energy intensity through this vertical.
Speaker #1: budgets are Defense growing globally , with a kegger of approximately 7% between 25 and 2030 , and we have been a trusted technology partner for this industry for a very , long very time .
Everything they already have to offer and.
And we are developing new offerings to from advanced spitting management.
Speaker #1: Semiconductors globally: semiconductor companies plan to invest about $1 trillion through 2030 in new fabrication plants. Notably, 29 out of 30 semiconductor companies rely on Siemens technology.
Automation with Plc's.
D C switching for efficient power and of course, a full digital twin simulation all the way from the trip to the buildings life Science.
Nine out of 12 top pharma companies rely on both smart infrastructure and digital industry offerings and integrate what they typically need and this dogmatics, we expand into software for their R&D processes.
Roland Busch: With NVIDIA Omniverse libraries and Siemens tools, your customers can build interactive, comprehensive digital twins of products, production lines, and entire factories before the first machine is ever switched on. Now we're bringing physical AI to the factory floor, inventing robotic factories that can think. Speaking of robots, someday there will be billions helping us in factories and at home. These robots will be made in Siemens-powered factories. This is yet another great new growth opportunity for Siemens born out of AI. The age of AI, the next industrial revolution, has arrived. Siemens once again is leading the way. Jensen Huang. Three-minute run through the technology stack, but also the market opportunities which we have. We are forging together with companies like NVIDIA and a very, very strong global ecosystem. We are in the pole position. Siemens is the leader in industrial AI for the real world.
Speaker #1: To exemplify, our automation and design software enables the production of chips at two nanometers. We offer high-precision building technologies for clean rooms.
Restaurants potentially.
Speaker #1: Now lever for grow AI , more specifically , we talk about industrial AI , and this is not really new to Siemens . We have been developing AI based tools for and products for more than 50 years .
We are technology leaders in many areas, including rolling stock signaling you heard about it.
Cloud and AI based predictive maintenance.
Our ability to support with financing solutions as an additional advantage for us.
Speaker #1: Today, we have 1,500 AI experts all around the world, and we use AI in three big ways to boost innovation and productivity to enhance our products.
And the rail transportation market, we expect to benefit also from government stimulus programs.
And we will take a deep dive on these three verticals in the afternoon and by the way we have an exhibition there, which you might want to enjoy and there are some experts who love to show their products to you.
Speaker #1: we also But building our own new AI offerings . And let's take them one by one . AI to boost our innovation , speed and our productivity .
So let me share a bit more on the following two aerospace defense and semiconductors.
Speaker #1: We are using applications from Google for AI powered improvement of our code . For example , for software defined automation . And this is really genuine code programming .
In aerospace we support our partners use fewer resources and we help them to develop more sustainable aircrafts, 95% of the votes aircraft engines are developed and manufactured with Siemens software.
Speaker #1: The same tools help us dramatically speed up our bids for complex projects, such as train projects. For example, we can shorten tender applications from weeks to hours.
Roland Busch: We have everything we need to build from here: the data, the domain know-how, the right people, the right partners. Of course, we do have the resources to invest. Now, you know how Siemens will accelerate growth, profitable growth, with a highly synergistic portfolio and a new fabric, an operating system for speed and scale. As one tech company, Siemens can address new markets with new products, software, and AI-enabled offerings, and tap into an unmatched ecosystem of world-class partners. We have the gravitas to do that. At the same time, we benefit from our traditional strengths: trust, trust from our customers grown over decades, a global footprint, a great team, our management at Team Siemens around the world. Here are the key takeaways regarding our ambition: revenue growth up 6% to 9%, picking up momentum over the next years, EPS pre-PPA high single-digit increase.
90% of satellites in the orbit has been developed with Siemens software.
Speaker #1: Secondly, we are providing power to our existing products with AI. Today, we have 38 AI offerings, and that number keeps growing. Two examples include AI that finds the best production path for machine tools.
Defense budgets are growing globally with a CAGR of approximately 7% between 25 and 2030 and we have been a trusted technology partner for this industry for a very very long time.
Semiconductors.
Speaker #1: This will be possible thanks to our data alliance with the machine tool industry. We talked about this. We use the Anthropic model, Claude, to refactor our own software.
Globally semiconductors companies plan to invest about one trillion dollars through 2030 in new fabrication plants.
29 out of 30 semiconductor companies rely on Siemens technology.
Speaker #1: In simple terms, AI cleans up and simplifies code. This improves both our software and hardware, making them connect faster and perform better.
Two examples.
Our automation and design software enables the production of two nanometer chips, we offer high precision really technologies for clean rooms.
Speaker #1: Concrete benefits for our tier portal customers: software profits from updates faster and with higher quality. And third, we are building new AI products.
Now.
Lever number for.
Grow more specifically.
Speaker #1: Siemens is developing an industrial foundation model with our domain know-how and the vast industrial data we have, including data from our partners.
Talk about industrial.
And this is not really new to Siemens we have been developing AI based tools and products for more than 50 years today, we have 1500 AI experts all around the world.
Speaker #1: this And model . This will model speak the language of engineers . It will ingest any kind of data , industrial data . We are working also on AI agents for industrial agents that plan , think , use tools and cooperate with humans to achieve a clear goals .
And to use AI in three big ways to boost innovation and productivity.
To enhance our products.
Roland Busch: New fabric, new markets, new products. Siemens has entered its next stage of growth. Now I'm happy to hand over to Ralf for more details about our finances. Thank you. Thank you, Roland, and good morning, everyone. Thank you for joining us here in Munich and on the webcast for our Siemens OneTech Strategy and Results event. Roland has been elaborating on our vision for the future and how Siemens has been successfully transforming. I'm excited to add my CFO perspective now on these topics. First, let's look at our impressive results for the fourth quarter of fiscal 2025. Our top line showed strong contributions from both digital industries and smart infrastructure. In particular, the AI software business posted a record quarter that was supported by quite a number of large deals.
But you're also building our own new AI offerings, and let's take them one by one.
Speaker #1: We are doing this with our partner AWS . Our award winning industrial co-pilot is already used by a number of customers . It offers up to 30% higher productivity in factories , and we developed it together with Microsoft for the AI opportunity with transcend .
AI to boost our innovation speed and our productivity, we're using applications from Google for AI powered improvement of our code for example for software defined automation and this is really genuine code programming.
The same tools help us dramatically speed up our bits for complex projects train project. For example, we can shorten tender application from weeks to hours.
Speaker #1: Our team consists of Philemon, who joined us a few months back from AWS. You will get to know him later in the breakouts.
Secondly.
Providing powering our existing products with AI.
Speaker #1: He is scaling an AI development center in Seattle, connected to our AI and domain experts all over the world. This is super important.
Today, we have 38 AI offerings and the number keeps growing two examples.
I did find the best production path for machine tools.
Speaker #1: By bringing domain know-how together with AI and data, we will invest more than €1 billion in our AI capability and offerings over the next three years, and we will work even more closely with our partners.
This will be possible, thanks to our data aligns with the machine tool industry, we talked about when.
We use and Tropic model Claude to re factor our own software and.
In simple terms AI cleans up and simplifies coat. This makes both our software and the hardware, it's connect faster and more performance.
Speaker #1: Don't mix up $1 billion with hundreds of billions in data centers. This is not an investment in infrastructure; this is making this infrastructure work for industrial AI.
Concrete benefits for our peer portal software customers profit from updates faster and with higher quality.
Speaker #1: This is where this $1 billion goes. Now, one example: Nvidia and Tencent. One of the CEOs sent us this video message, and it takes approximately three minutes.
Roland Busch: SI saw broad-based volume growth from already high levels, including larger contract wins from data center and energy customers. Mobility's order and revenue growth faced tough comps, as you know, in the prior year quarter. Overall, this resulted in a book-to-bill ratio of 1.02 and a high-quality order backlog of EUR 117 billion, as Roland mentioned before, providing visibility and supporting future value-generating growth. All regions have been contributing toward the 6% comparable revenue growth for the group. Most notably, Asia-Australia increased 8%, with China up 6% and India up 11%. The Americas and EMEA both grew 6%. Stringent execution converted into a sound industrial business profit of EUR 3.2 billion. As a result, the profit margin came in at 15.3%. This included material severance and M&A-related effects at digital industries, as previously announced and guided. Smart infrastructure once again extended its proven track record of continuing margin improvement.
And third.
We are building new AI products Siemens is developing an industrial foundation model.
With our domain Knowhow.
And with the vast industrial data behalf, including those from our partners in this model.
Speaker #3: Thank you, Roland, and our Siemens friends for the invitation to join you on your Capital Market Day. Siemens is one of the world's great technology companies.
This model will speak the language of engineers, it will interest any kind of data industrial data.
Speaker #3: Over 150 years ago, you ignited the first Industrial Revolution. The Siemens dynamo transformed motion into electricity, lighting up cities, powering machines, and electrifying the modern age.
We are working also on AI agents for industrial agents that plan, thank yous tools incorporate with humans.
To achieve a clear clear goals, we are doing this with our partner AWS.
Our award winning industrial Copilot is already used by a number of customers. It offers up to 30% higher productivity in factories, and we developed it together with Microsoft.
Speaker #3: Today, Siemens builds the systems that power our industries and move our world once again. We stand at the beginning of a new industrial revolution.
Speaker #3: AI is a technology. It will transform every application in every industry and introduce new ones. But AI is also infrastructure.
For the AI opportunity with strengthened our team.
With velocities Tillemann he joined US a few months back from AWS.
You will get to November later in the breakouts. He is scaling and AI development center in Seattle connected to our AI and domain experts all over the world. This is super important bring domain, knowhow and AI and data together.
Speaker #3: It new kind of factory demands a factories that manufacture intelligence . Every company will use it . Every nation will build it . Now every company will have two factories , one that produces things and one that produces the intelligence that drives them .
Roland Busch: Earnings per share before purchase price allocation accounting, our so-called EPS pre-PPA, reached EUR 2.51, excluding LTA and automatic effect, totaling a negative of EUR 0.21. Since cash generation is the ultimate yardstick for any business's performance, I'm extremely proud of our EUR 5.3 billion of free cash flow, the highest level we ever recorded for a quarter. I applaud Team Siemens for this truly outstanding performance. Our dividend proposal of EUR 5.35 reflects our company's strength, and our focus on providing an attractive shareholder return. Following our progressive dividend policy, this proposal represents an increase of EUR 0.15 based on our share price at just below EUR 230 at close of the fiscal year on 30 September 2024. The proposal equals an attractive dividend yield of 2.3%.
In the next three years.
We will invest more than 1 billion euros in our AI capability and offerings.
Speaker #3: AI factories are the infrastructure for the age of AI. Our partnership with Siemens spans every layer of this transformation. We are doing so much together.
And we will work.
Even more closely with our partners.
Don't mix up $1 billion with hundreds of billions in data centers. This is not investment in infrastructure. This is making this infrastructure work for the industrial AI. This is where this 1 billion goes.
Speaker #3: Siemens helps us build NVIDIA products, and together we help build for the world. NVIDIA engineers build Blackwell, the world's most advanced platform for accelerated computing and AI, with Siemens EDA software accelerated by CUDA X. Blackwell is the computation engine of AI factories, and Siemens Smart Infrastructure is the power behind it.
Now.
One example, nvidia.
And tens and one where C O send us this video message and Troy It takes approximately three minutes.
Thank you Roeland and our Siemens friends.
Speaker #3: Over 100 GW of AI factories will be built before the end of the decade. These are new Siemens opportunities. We're transforming how engineers design, simulate, and validate everything they build.
For the invitation to join you on your capital market day.
Siemens is one of the world's great technology companies.
150 years ago, you ignited the first industrial Revolution.
Roland Busch: As another important pillar for shareholder return, we will continue executing our successful and accelerated share buyback program, which has had an average price of EUR 198, with EUR 3.6 billion being bought back so far. Looking ahead, we will flexibly react to market developments by leveraging our technological leadership, now expanded through the acquisitions of Altair and Dotmatics, of course, and we will drive value-creating growth in fiscal 2026. I will come to our assumptions in a moment. First, however, let me walk you through the fourth quarter's result for our businesses. At EUR 5.5 billion, orders for Digital Industries were up substantially, both sequentially and over the prior year quarter. This led to a book-to-bill ratio of 1.1. In a continuously challenging market environment, the automation business grew 30% on easy comps, however, in the prior year and showed a clear uptick in orders sequentially.
Siemens Dynamo transformed motion into electricity.
Speaker #3: Siemens tools accelerated by Nvidia CUDA-X and physics NEMO deliver massive speed-ups to fluid dynamics, structural mechanics, and electromagnetic simulations. What once took weeks now happens in minutes or even in real time.
Lining up cities powering machines and electrifying the modern age.
Today, Siemens builds the systems that power, our industries and move our world.
Once again.
We stand at the beginning of a new industrial Revolution.
Speaker #3: And with Nvidia Omniverse libraries in Siemens tools , your customers can build interactive , comprehensive digital twins of products , production lines , and entire factories .
AI.
AI is amazing technology. It will transform every application in every industry and introduce new ones.
Speaker #3: Before the first machine is ever switched on, we are bringing physical AI to the factory floor, inventing robotic factories that can think.
But.
AI is also infrastructure.
It demands a new kind of factory factories that manufacture intelligence.
Speaker #3: Speaking of robots, someday there will be billions helping us in factories and at home. These robots will be made in Siemens-powered factories.
Every company will use it.
Every nation will build it.
Now.
Every company will have two factories, one that produces things and one that produces the intelligence that drives them.
Speaker #3: This is yet another great new growth opportunity for Siemens, born out of AI. The age of AI, the next industrial revolution, has arrived, and Siemens once again is leading the way.
Our factories is the infrastructure for the age of AI.
Our partnership with Siemens spans every layer of this transformation we are doing so much together.
Roland Busch: The AI software business exceeded our expectations and recorded an all-time high quarterly orders of above EUR 2.5 billion. Several large contracts in the product lifecycle management and electronic design automation businesses helped in setting this record. Digital Industries' orders backlog rose to EUR 9.5 billion, with a further increase in software share. Revenue for the AI increased 9% on a broad basis and reached the high end of our expectations. Therein, automation achieved 10% growth, led by discrete up 10%, driven by the factory automation business. The software business grew by 8%, driven by PLM, up 11%, and EDA was up 3% on tough comps. On an operational level, the AI's margin benefited from already implemented capacity adjustments in automation, as well as from strong conversion in software. Driven by broad-based productivity gains, the AI's economic equation remained net positive, which is very important.
Speaker #3: Dankeschön .
Siemens helps us build and video products.
Speaker #1: A three minute run through the technology stack , but also the market opportunities , which we have . We are forging together with companies Nvidia and a very , very strong global ecosystem .
And together, we help build for the world.
Nvidia engineers build Blackwell the world's most advanced platform for accelerated computing, and AI, which Siemens Eda's software accelerated by Cuda X.
Speaker #1: We are in the power position. Siemens is the leader in industrial AI for the real world, and we have everything we need to build from here.
Blackwell is the computation engine of AI factories, and Siemens Smart infrastructure is the power behind it.
Speaker #1: data The , the domain , know how the right people , the right partners and of course , we do have the resources to invest .
Over 100, Gigawatts of AI factories will be built before the end of the decade.
These are new Siemens opportunities.
Speaker #1: Now you know how Siemens will accelerate growth, profitable growth with a highly synergistic portfolio and a new fabric, an operating system for speed and scale.
We're transforming how engineers design simulate and validate everything they built.
Siemens CAE tools accelerated by Nvidia Cuda X and physics, Nemo deliver massive speed ups do fluid dynamics structural mechanics and electromagnetic stimulations.
Speaker #1: As company one tech , Siemens can address new markets with new products , software and NE enabled offerings and tap into an unmatched ecosystem of world class partners .
Once two weeks now happens in minutes or even real time.
And with Nvidia omnivorous libraries, and Siemens tools your customers can build interactive comprehensive digital twins of products production lines and entire factories.
Roland Busch: The reported margin of 15.5% included material negative effects, as indicated previously. They had a magnitude of 440 basis points and were mainly related to the automation business. Excluding Altair and Innomotics, the AI's margin of 17.5% came in slightly above our own expectations. A clear highlight was the excellent free cash flow across all businesses, which expanded from an already high prior year level. Annual recurring revenue from the AI software business continued to show good momentum with a healthy growth rate of 10% on high comps. Our SaaS business is well on track, as evidenced by EUR 2.3 billion of cloud ARR. Excluding Altair and Innomotics, the cloud ARR share was close to 50%. This outcome is clearly above our initial target of 40% by the end of fiscal 2025. All customer-related performance indicators continue to show a favorable trajectory, too.
Speaker #1: We the have gravitas to do that . At the same time , we benefit from our traditional strengths trust . Trust from our customers grown over decades , a global footprint , a great team , our management team , Siemens around the world and here are the key takeaways regarding our ambition , revenue growth up 6 to 9% .
Before the first machine is ever switched on.
Now, we're bringing physical AI to the factory floor inventing robotic factories that can think.
Speaking of robots Sunday.
There will be billions, helping us in factories and at home. These robots will be made in Siemens powered factories. This is yet another great new growth opportunity for Siemens born out of AI.
Speaker #1: Picking up momentum over the next years EPs high single digit increase . New fabric , new markets , new products Siemens has entered its next stage of growth And now happy to I'm hand over to Ralph for more details about our financials .
The age of AI. The next industrial Revolution has up right and Siemens once again is leading the way.
Duncan.
Three minute run through the cannula stack, but also the market opportunities, which we have we are forging together with companies like Nvidia and a very very strong global ecosystem. We are in the pole position Siemens is the leader in industrial.
Speaker #1: Thank you . Thank you . Roland , and good morning , everyone . Thank you for joining us here in Munich . And on the webcast for our Siemens Von Tech strategy and Results event .
For the real World.
And we have everything we need to build from here.
The data.
The domain Knowhow the right people the right partners and of course be to have the resources to invest.
Roland Busch: Now, looking at the regional top-line perspective, the AI's automation businesses showed growth across the board. Their growth rates reflect easy comps for orders, as well as support from typical seasonal tailwinds, as indicated previously. Germany and the US drove sequential order improvement on a global level, while China was seasonally softer compared to Q3 of fiscal 2025. Overall, the AI's automation market momentum remained subdued and behind initial recovery expectations, so no V-shape. Many indicators continue pointing to restrained investment activities in the near future. We expect this challenging market environment to persist into fiscal 2026. In contrast, the AI's industrial software market clearly shows favorable dynamics on high levels, with AI remaining a key driver. However, difficult macro and regulatory aspects are causing uncertainty in this highly attractive market too. Against this backdrop, the AI is continuing its transformation very successfully.
Now.
You know, how Siemens will accelerate growth.
Speaker #1: Roland has been elaborating on our vision for the future and how Siemens has been successfully transforming. I am excited to add my CFO perspective now on these topics.
Profitability growth.
We have a highly synergistic portfolio.
And then new fabric and operating system for speed and scale.
Speaker #1: But first , let's look at our impressive results for the fourth quarter fiscal 25 . Our top line showed strong contributions from both digital industries and smart infrastructure in particular , the software business posted a quarter record was that supported by quite a number of large deals .
A small tech company Siemens can address new markets with new products software and then I enabled offerings.
And tap into an unmatched ecosystem of World class partners, we have the gravitas to do that at.
At the same time, we benefit from our traditional strengths.
Speaker #1: I As saw broad based volume growth from already levels high , including larger contract wins from data center and energy customers . Mobility order and revenue growth faced tough comps .
Trust Trust from our customers growing our decades.
Our global footprint.
Great team, our management team Siemens around the world.
Speaker #1: As you know in the prior year quarter . Overall , this resulted in a book to bill ratio of 1.02 and a high quality order backlog of 117 billion .
And.
Here are the key takeaways.
Regarding our ambition revenue growth up 6% to 9% picking up momentum over the next years EPS P. P. B a high single digit increase.
Roland Busch: The team is committed to turning groundwork into performance. The automation business will continue to drive its adjustment measures, which have been making good progress. Having digested a huge portion of severance cost in fiscal 2025, we do expect a significantly lower amount of severance charges in fiscal 2026. We also expect further positive effects from severance to materially unfold from fiscal 2026 onwards. The software business will rigorously focus on completing the SaaS transition, and on integrating Altair and Dotmatics to leverage market dynamics and synergetic effects. Integration efforts are expected to result in a negative impact of around 120 basis points for fiscal 2026 on the AI level. For Digital Industries, in total, we do expect comparable revenue growth in the range of 5% to 10% in fiscal 2026.
Speaker #1: As Roland mentioned before , providing visibility and supporting future value generating growth , all regions have been contributing toward the 6% comparable revenue growth for the Group , most notably Asia , Australia increased 8% , with China up 6% and India 11% .
Speaker #1: As Roland mentioned before , providing visibility and supporting future value generating growth , all regions have been contributing toward the 6% comparable revenue growth for the Group , most notably Asia , Australia increased 8% , with China up 6% and India up The Americas and EMEA both grew 6% stringent execution converted into a sound industrial business .
New fabric.
New markets New products Siemens has entered its next stage of growth.
And now I'm happy to hand over to Ralph.
For more details about our financials. Thank you.
Speaker #1: Profit of €3.2 billion . As a result , the profit margin came in at 15.3% . This included material severance and M&A related effects at Digital Industries .
Thank you Roeland and good morning, everyone.
Speaker #1: As previously announced and guided, Smart Infrastructure once again extended its proven track record of continuing margin improvement. Earnings per share before purchase price allocation accounting.
Thank you for joining us here in Munich, and on the webcast for our cement one tech strategy and results event.
Roland has been elaborating on our vision for the future and how Siemens has been successfully transforming I'm excited to at my CFO perspective, now on these topics, but first.
Speaker #1: Our so-called EPs prepay reached €2 and €51 cents , excluding LTM . Dramatic effect . Totaling a negative of €21 cents . Since cash generation is the ultimate yardstick for any businesses performance .
Roland Busch: Growth across automation and software, as well as tailwinds from cost reduction and productivity measures, will support profitability at the AI. We are again aiming for a net positive economic equation for the year, obviously. We expect the profit margin for fiscal 2026 to be in the range of 15% to 19%. For the first quarter, we see comparable revenue growth in the upper half of our annual guidance range. We anticipate that the AI's profit margin will be slightly up over the prior year's level, reflecting ongoing severance cost and M&A-related effects. Now, smart infrastructure, once again impressed with flawless execution, and extended its track record of operational margin improvement to 20 quarters in a row. Leveraging supportive market opportunities, orders increased 5% from an already high prior year level, with all businesses being up.
Let's look at our impressive results for the fourth quarter of fiscal 'twenty five.
Our top line showed strong contributions from both digital industries and smart infrastructure in particular, the ice software business posted a record quarter that was supported by quite a number of large deals.
Speaker #1: I'm extremely proud of our €5.3 billion in free cash flow—the highest level we have ever recorded for a quarter. I applaud Team Siemens for this truly outstanding performance.
I saw broad based volume growth from already high levels, including larger contract wins from data center and energy customers mobility as order and revenue growth faced tough comps as you know in the prior year quarter.
Speaker #1: Our dividend proposal of €5.35 reflects our company's strength and our focus on providing an attractive shareholder return following our progressive dividend policy.
Speaker #1: This proposal represents an increase of €0.15 based on our share price, which was just below €230 at the close of the fiscal year on September 30.
Overall this resulted in a book to Bill ratio of one point or two in a high quality order backlog of 117 billion as roeland mentioned before providing visibility and supporting future value generating growth.
Speaker #1: The proposal equals an attractive dividend yield of 2.3% . As another important pillar for shareholder return , we will continue executing our successful and accelerated share buyback program , which has had an average price of €198 , with €3.6 billion being bought back so far .
All regions have been contributing towards the 6% comparable revenue growth for the group, most notably Asia, Australia increased 8% with China up, 6% and India up 11%, the Americas and EMEA both grew 6%.
Roland Busch: Book-to-bill was just slightly below 1 and resulted in a strong backlog of EUR 18.6 billion. Large orders materially recovered sequentially from a lower level in the third quarter, yet remained below the extremely strong prior year's fourth quarter. Most of these orders again were related to data center customers. Revenue growth was broad-based and reached 9%, slightly above expectations. The strongest contributions once again came from the electrification business. It was up 17% on stringent backlog execution, especially in Europe and in the US. In fiscal 2025, revenue in SI's data center business reached EUR 2.9 billion, up 40% over the prior year level. The book-to-bill was clearly above 1. As a result, SI's data center exposure has been steadily growing and now amounts to around 15%, give or take, of revenue.
Stringent execution converted into a sound industrial business profit of $3 2 billion euros. As a result, the profit margin came in at 15, 3%. This included material severance and M&A related effects of digital industries, as previously announced and guidance.
Speaker #1: Looking ahead, we will flexibly react to market developments by leveraging our technological leadership expanded through the acquisitions of Altair and Dotmatics.
Speaker #1: Of course , and we will drive value creating growth fiscal 26 . I will come to our assumptions in a moment . First , however , let me walk through fourth quarter the results for our businesses at orders for €5.5 billion , digital industries were up substantially .
Smart infrastructure once again extended its proven track record of continuing margin improvement earnings per share before purchase price allocation accounting also called EPS pre PPA reached two euros and 51 euro cents, excluding alka and automatic effect totally.
Speaker #1: Both sequentially over the and prior year quarter . This led to a book to bill ratio of 1.1 in a continuously challenging market environment , the automation business grew 30% on easy comps .
<unk> and negative of 21 euro cents.
Since cash generation is b ultimate yardstick for any business is performance I'm extremely proud of our $5 3 billion of free cash flow the highest level ever recorded for a quarter.
Speaker #1: However , in the and showed year a clear prior uptick in sequentially . The software orders business exceeded our expectations and recorded an all time high quarterly orders of above €2.5 billion .
Roland Busch: We do intend to keep leveraging opportunities in this fast-growing market and anticipate revenue growth in the 10% to 20% range for fiscal 2026. Smart infrastructure's stringent backlog execution also led to margin expansion of 120 basis points, ladies and gentlemen. The profit margin of 18.7% even topped our own expectations. Smart infrastructure continued to benefit from economies of scale due to higher revenue and high capacity utilization. Its economic equation remained clearly net positive, supported by productivity gains and adequate pricing measures. Cash conversion was again excellent and led to a superb free cash flow above EUR 1.4 billion, only slightly below last year's all-time high level. In particular, effective working capital management fueled this seasonally strong free cash flow again. Let's turn to regional top-line development at SI. The US stood out with strong performance in both orders and revenues.
I applaud team's Siemens for this truly outstanding performance.
Speaker #1: Several large contracts in the product lifecycle management and electronic design automation businesses helped in setting this record. Digital Industries orders backlog rose to €9.5 billion, with a further increase in software share revenue for the year, which increased 9% on a broad basis and reached the high end of our expectations therein.
Our dividend proposal of five year run 35 euro cent reflect our company's strength.
And our focus on providing an attractive shareholder return.
Following our progressive dividend policy. This proposal represents an increase of 15 euro cents based on our share price at just below 230 euros at close of the fiscal year on September 30, the proposal equals an attractive dividend yield of 2.3 per se.
Speaker #1: Automation achieved 10% growth , led by degrees , up by discreet , up 10% , driven by the factory automation business . The software business grew by 8% , driven by PLM , up 11 , and EDA was up 3% on tough comps on an operational level , the Ice margin benefited from already implemented capacity adjustments in automation as well as from strong conversion in software driven by broad based productivity gains .
<unk>.
As another important pillar for shareholder return, we will continue executing our successful and accelerated share buyback program, which has had an average price of 198 euros with 3.6 billion euros being bought back so far.
Looking ahead, we will flexibly react to market developments by leveraging our technological leadership now expanded through the acquisitions of Altair and cosmetics of course, and we will drive value creating growth in fiscal 'twenty six I believe.
Speaker #1: The Ice equation remained net positive , which is very important . The reported margin of 15.5% included material negative effects as indicated previously , they had a magnitude of 440 basis points and were mainly related to the automation business , excluding Althea and Automatic .
Roland Busch: In this region, all businesses saw top-line growth, led by remarkable growth in electrification on data center wins. In contrast, China recorded declines in orders and revenue. This decrease was due to a drop in the buildings business, given ongoing market weakness, especially in the sluggish real estate market. On a global basis, we do expect consistent market trends, with most verticals pointing to further growth opportunities. In particular, data centers and power utilities remain key growth drivers. Building on this strong technology and global footprint, we see SI geared for further profitable growth in the future. For the full fiscal year 2026, we expect smart infrastructure to achieve comparable revenue growth in the range of 6% to 9%. Leveraging ongoing growth opportunities and a relentless focus on productivity, we anticipate that smart infrastructure will achieve a profit margin within the range of 18% to 19%.
To our assumptions in a moment.
First however, let me walk you through the fourth quarters results for our businesses.
Speaker #1: The ice margin of 17.5% came in slightly above our own expectations . A clear highlight was the excellent free cash flow across all businesses , across all businesses , which expanded from an already high prior year level annual recurring revenue from different business continued to show good momentum , with a healthy growth rate of 10% on high comps .
At $5 5 billion euros orders for digital industries were up substantially both sequentially and over the prior year quarter. This led to a book to bill ratio of 1.1 in there.
A continuously challenging market environment, the automation business grew 30% on easy comps. However in the prior year and showed a clear uptick in orders sequentially, Yeah software business exceeded our expectations and record at an all time high quarterly orders of above 2.5.
Speaker #1: Our SaaS business is well on track, as evidenced by €2.3 billion of cloud IRR. Excluding Althea, the cloud IRR share was close to 50%.
<unk>.
Several large contracts in the product lifecycle management and electronic design automation businesses help in setting this record.
Speaker #1: This outcome is clearly above our initial target of 40% by the end of fiscal 2025. All customer-related performance indicators continue to show a favorable trajectory.
Roland Busch: For the first quarter, we expect SI's comparable revenue growth rate to be within the full-year guidance range. Considering seasonal effects on exchange rate headwinds, we anticipate that the first quarter profit margin will be below SI's annual guidance range. Nevertheless, SI has the potential for another quarter of year-over-year margin expansion. Now let's move to Mobility. Mobility closed a strong fiscal 2025 on a positive note, and with excellent free cash flow. At EUR 2.5 billion, orders remained below the strong prior year level due to a lower volume from large orders. However, going forward into fiscal 2026, the order pipeline looks very promising again. Mobility's order backlog stands at EUR 52 billion, and it has a very healthy gross margin, improved over the prior year level. As indicated previously, revenue of EUR 3.2 billion developed flattish on tough comps.
Citral industry's orders backlog rose to $9 5 billion with a further increasing software share.
Revenue for the eye increased 9% on a broad basis and reached the high end of our expectations. There in automation achieved 10% growth led by discreet attempts by discrete up 10% driven by the factory automation business. The software business grew by 8% driven by P. L M up 11.
Speaker #1: Now , looking at the regional top line perspective , the ice automation businesses showed growth across the board . Their growth rates reflect easy comps for orders as well as support from typical seasonal tailwinds .
Speaker #1: As indicated previously, Germany and the U.S. drove sequential order improvement on a global level, while China was seasonally softer compared to Q3 of fiscal 2025.
In EMEA was up 3% on tough comps.
On an operational level the ice margin benefited from already implemented capacity adjustments in automation as well as from strong conversion in software.
Speaker #1: Overall , the automation market momentum remains subdued and behind initial recovery expectations , so no V-shape . Many continue indicators , pointing to restraint , investment activities in the near future .
Driven by broad based productivity gains Ti's economic equation remained net positive which is very important the reported margin of 15.5% included material negative effects as indicated previously they had a magnitude of 440 basis points and were mainly related to the <unk>.
Speaker #1: We expect this challenging market environment to persist into fiscal 2026. In contrast, the ICE industrial software market clearly shows favorable dynamics at high levels, with AI remaining a key driver.
Automation business.
Excluding alterra Android kinetics, the highest margin of 17, 5% came in slightly above our own expectations.
Speaker #1: However difficult, macro and regulatory aspects are causing uncertainty in this highly attractive market. Against this backdrop, [company name] is continuing its transformation very successfully.
Roland Busch: The rolling stock and customer services business came in below their strong level of the prior year quarter and outweighed growth in rail infrastructure. The profit margin of 8.5% reflects a less favorable business mix compared to the prior year's fourth quarter. In terms of cash generation, mobility followed through on its commitment and delivered an excellent EUR 1.4 billion of free cash flow in the fourth quarter. The strong year-end finish pushed fiscal 2025 free cash flow to more than EUR 1 billion. At a cash conversion rate of 0.93, this result is well in line with our one-minus growth target. As you know, mobility has an attractive asset-light business model and has delivered consistently healthy cash flows and conversion for many years. Over the last 12 years, mobility's growing top-line generated a cumulative EUR 10.2 billion of profit, which resulted in EUR 9.9 billion of free cash flow.
The highlight was the excellent free cash flow across all businesses across all businesses, which expanded from an already high prior year level.
Speaker #1: The team is committed to turning groundwork into performance. The automation business will continue to drive its adjustment measures, which have been making good progress.
Annual recurring revenue from the <unk> software business continued continued to show good momentum with a healthy growth rate of 10% on high comps.
Speaker #1: Having digested a huge portion of severance costs in fiscal 2025, we do expect a significantly lower amount of severance charges in fiscal 2026.
The us business is well on track as evidenced by $2 3 billion euros of cloud era.
Excluding Altair Anthropometrics the cloud <unk> was close to 50%. This outcome is clearly above our initial target of 40% by the end of fiscal 'twenty five.
Speaker #1: We also expect further positive effects from severance to materially unfold from fiscal SaaS, completing the software, and for 120 basis points negative effects expected to be around 26 on and points from 26 onwards.
Speaker #1: We also expect further positive effects from severance to materially unfold from fiscal SaaS while completing the software, and for 120 basis points negative effects expected to materialize around 26 onwards. The business on a D level for digital industries.
All customer related performance indicators continue to show a favorable trajectory too.
Yeah.
Now looking at the regional topline perspective, the ice automation businesses showed growth across the board.
Speaker #1: In total , we do expect comparable revenue growth in the range of 5 to 10% in fiscal 26 , growth across automation and software , as well as tailwinds from cost reduction and productivity measures , will support profitability at Di , we are again aiming for a net positive economic equation for the year .
Their growth rates reflect easy comps for orders as well as support from typical seasonal tailwind as indicated previously Germany and the U S drove sequential order improvement on a global level, while China was seasonally softer compared to Q3 of fiscal 'twenty five.
Roland Busch: With that, Siemens Mobility is a clear industry benchmark in terms of profitability and free cash flow conversion. For fiscal 2026, we do assume that both comparable revenue growth and profit margin will be within the corridor of 8% to 10%. For the first quarter, we anticipate revenue growth and margin within the same corridor. Now, as I mentioned, I couldn't be more proud of our EUR 5.3 billion of free cash flow all in for the Siemens Group. This was not only an all-time high for a quarter, but also pushed our fiscal 2025 free cash flow to a record of EUR 10.8 billion. This success is attributable to strength across the entire industrial business landscape, each of which delivered more than EUR 1 billion by themselves. A clear testament of the strength and dedication of the entire team Siemens.
Overall, yes automation market momentum remained subdued in behind initial recovery expectations. So no reshape.
Speaker #1: Obviously, we expect the profit margin for fiscal 2026 to be in the range of 15% to 19% for the first quarter. We see comparable revenue growth in the upper half of our annual guidance range.
Many indicators continue pointing to restrained investment activities in the near future we.
We expect this challenging market environment to persist into fiscal 2006. In contrast, the industrial software market clearly shows favorable dynamics on high levels with AI remaining a key driver however, difficult macro and regulatory aspects are causing uncertainty in this highly attractive.
Speaker #1: We anticipate that these profit margins will be slightly over the prior year's level, reflecting ongoing severance costs and M&A-related effects.
Speaker #1: Now , smart infrastructure once again impressed with flawless execution and extended its track record of operational margin improvement to 20 quarters in a row , leveraging supportive market opportunities , orders increased 5% from an already high prior year level , with all businesses being up book to bill was just slightly below one and resulted in a strong backlog of €18.6 billion .
Market too.
Against this backdrop Ti is continuing its transformation very successfully the team is committed to turning groundwork into performance.
The automation business will continue to drive its adjustment measures, which have been making good progress having digested a huge portion of severance cost in fiscal 'twenty five we do expect a significantly lower amount of severance charges in fiscal 'twenty. Six we also expect further positive effect from several.
Roland Busch: This record performance resulted in an outstanding cash return of 13.7%, and it marked the sixth consecutive year of double-digit free cash flow return on sales. Continuing to build on this industry-leading track record remains our clear ambition. Now, let me use this opportunity to highlight the most relevant assumptions for our fiscal 2026 outlook. We do assume that the global economic environment will stabilize, and that global GDP growth will remain near prior year level. As a percentage of revenue, we will maintain R&D and SG&A at similar levels as in fiscal 2025. These investments will help drive even stronger customer focus, faster innovations, and higher profitable growth. To further support momentum, we will also increase CapEx to optimize our global footprint and expand capacity in targeted growth fields. Severance costs are expected to be in the range of EUR 350 to 400 million, significantly below fiscal 2025.
Speaker #1: Large orders recovered materially sequentially from a lower level in the third quarter but remained below the extremely strong prior year's fourth quarter.
And to materially unfold from fiscal 'twenty six onwards, the software business will rigorously focused on completing the SaaS transition and on integrating Altair and dogmatics to leverage market dynamics and synergetic effects integration efforts are expected to result in a negative impact of around 120 base.
Speaker #1: Most of these orders again were related to data center customers. Revenue growth was broad-based and reached 9%, slightly above expectations.
Speaker #1: Growth. The strong contribution once again came from the electrification business. It was up 17% on stringent backlog execution, especially in Europe and in the U.S.
<unk> points for fiscal 'twenty six on E on Ti level.
For digital industries in total we do expect comparable revenue growth in the range of 5% to 10% in fiscal 'twenty six growth across automation and software as well as tailwind from cost reduction and productivity measures will support profitability at Ti.
Speaker #1: In fiscal 2025, revenue in the CIS data center business reached €2.9 billion, up 40% compared to the prior year level. The book-to-bill ratio was clearly above one as a result.
Speaker #1: As I said , the exposure has been steadily growing and now amounts to around 15% , give or take , of revenue . We do intend to keep leveraging opportunities in this fast growing market and anticipate revenue growth in the 10 to 20% range for fiscal 26 , smart infrastructure , stringent backlog execution also led to margin expansion of 120 basis points .
We are again aiming for a net positive economic equation for the year, obviously, we.
We expect the profit margin for fiscal 'twenty six to be in the range of 15% to 19%.
Roland Busch: Up to half of the group's total 26 severance expenses are expected to occur at Digital Industries. We will continue working on ongoing capacity adjustments, of course, particularly in the automation business, and on ensuring competitiveness across our entire business scope. Unfortunately, we have to expect exchange rate to be a strong burden for fiscal 2026. Based on current US dollar forward rates in the market, we see a negative translation impact of around 4% on our top line and 50 basis points on our industrial margin. We do expect this impact to convert into a headwind of around EUR 0.70 to 0.80 for EPS pre-PPA. Now, let me share our assumptions for the line items below Industrial Businesses. We expect governance costs to be net zero of brand fees, in line with a target we set to ourselves last Capital Market Day back in 2021.
For the first quarter, we see comparable revenue growth in the upper half of our annual guidance range. We anticipate that the ice profit margin will be slightly up over the prior year's level, reflecting ongoing severance cost and M&A related effect.
Speaker #1: Ladies and gentlemen, the profit margin of 13% for Q4 even topped our own expectations, at 18.7%. Smart Infrastructure continued to benefit from economies of scale due to higher revenue and high capacity utilization.
Now smart infrastructure.
Once again impressed with flawless execution and extended its track record of operational margin improvement to 20 quarters in a row.
Speaker #1: Its economic equation remained clearly net positive, supported by productivity gains and adequate pricing measures. Cash conversion was again excellent and led to a superb free cash flow above €1.4 billion.
Leveraging supportive market opportunities orders increased 5% from an already high prior year level with all businesses being up book to Bill was just slightly below one and resulted in a strong backlog of 18.6 billion euros large orders mature.
Speaker #1: Only slightly below last year's all time high levels . In particular , effective working capital management fueled the seasonally strong free cash flow again , let's turn to regional top line development at sea .
He really recovered sequentially from a lower level in the third quarter, but remained below the extremely strong prior year's fourth quarter.
Speaker #1: The U.S. stood out with strong performance in both orders and revenues in this region. All businesses saw top-line growth, led by remarkable growth in electrification on data center wins. In contrast, China recorded declines in orders and revenue.
Most of these orders again were related to data center customers.
Roland Busch: Innovation costs will be broadly comparable to the prior year level and will reflect investments related to our One Tech Company program, as outlined from Roland. Financing elimination and others depend on portfolio topics, of course, and we expect them to be roughly on the prior year level again. Finally, we assume a tax rate of 23% to 27%. I have already described our fiscal 2026 assumptions for our industrial businesses. On the Siemens Group level, we expect 6% to 8% comparable growth. We again anticipate a book-to-bill ratio above 1. We expect EPS pre-PPA in a range of EUR 10.40 to 11 in fiscal year 2026. This range reflects material negative impact from exchange rate, as mentioned before, and compares to a fiscal year 2025 amount of EUR 10.31, which includes effects from Altair and Dotmatics. As always, this outlook excludes burdens from regulatory matters.
Revenue growth was broad based and reached a 9% slightly above expectations growth. The strong contributions once again came from the electrification business. It was up 17% on stringent backlog execution, especially in Europe and in the U S.
Speaker #1: This decrease was due to a drop in the buildings business, given ongoing market weakness, especially in the sluggish real estate market. On a global basis, we do expect consistent market trends, with most verticals pointing to further growth opportunities.
In fiscal 'twenty five revenue in S. Ice data centre business reached $2 9 billion up 40% for all over the prior year level. The book to Bill was clearly above one.
Speaker #1: particular , In data centers and power utilities remain key . Growth drivers . Building on this strong technology and global footprint , we see , as I geared for further profitable growth in the future .
As a result as I State center exposure has been steadily growing and now amounts to around 15% give or take of revenue. We do intend to keep leveraging opportunities in this fast growing market and anticipate revenue growth in the 10% to 20% range for fiscal 'twenty six.
Speaker #1: For the full fiscal year 2026, we expect Smart Infrastructure to achieve comparable revenue growth in the range of 6% to 9%, leveraging ongoing growth opportunities and a relentless focus on productivity.
Smart infrastructure stringent backlog execution also led to margin expansion of 120 basis points, ladies and gentlemen, the.
Speaker #1: We anticipate that smart infrastructure will achieve a profit margin within the range of . 18 to 19% quarter , we its eyes comparable revenue growth rate expect to be within the full year guidance range , considering seasonal effects on exchange rate headwinds , we anticipate that the first quarter profit margin will be below as Ice annual guidance range .
The profit margin of 13 of 18.7% even topped our own expectations smart infrastructure continued to benefit from economies of scale.
Roland Busch: In a nutshell, we are entering fiscal 2026 from a clear position of strength and with a very ambitious outlook. Let's move to the second part of my presentation for today. First, a review of and status update on the transformation that we have been driving successfully in recent years, and then a look ahead for our financial ambitions and priorities for the future. Let's start by looking back quickly at the substantial value Siemens has been creating in the five years since Roland took office as President and CEO of Siemens AG. Siemens is in excellent shape and has been transforming successfully. Our teams have maneuvered Siemens very well through a period really marked by volatility, markets, and geopolitical challenges. All this resulted in a 151% total shareholder return since the beginning of fiscal 2021, clearly over and above industry-leading levels.
To higher revenue and high capacity utilization its economic equation remain key yearly net positive supported by productivity gains and adequate pricing measures.
Speaker #1: Nevertheless , as I had the potential for another quarter of year over year margin expansion . Now let's move to mobility . Mobility closed a strong fiscal 25 on a positive note , and with excellent free cash flow at €2.5 billion , orders remained below the strong prior year level due to a lower volume from large orders .
Cash conversion was again excellent and led to a superb free cash flow above 1.4 billion euros only slightly below last year's all time high level in particular effective working capital management fueled this seasonally strong free cash flow again.
Let's turn to regional topline development at ESI.
I stood out with strong performance in both orders and revenues in this region all businesses to our topline growth led by remarkable growth in electrification on data center wins in contrast, China recorded declines in orders and revenue.
Speaker #1: However , going forward into fiscal 26 , the order pipeline looks very promising . Again , mobility is backlog order stands at €52 billion and it has a very healthy gross margin , improved over the prior year level .
This decrease was due to a drop in the buildings business given the ongoing market weakness, especially in the sluggish real estate market.
Speaker #1: As indicated previously , revenue of €3.2 billion euros developed flattish on tough comps . The rolling stock and customer services business came in below their strong level of the prior year quarter , and outweighed growth in rail infrastructure .
On a global basis, we do expect consistent market trends with most verticals pointing to further growth opportunities in particular data centers empower utilities remain key growth drivers.
Building on this strong technology and global footprint, we see as I geared for further profitable growth in the future for the full fiscal year 'twenty six we expect smart infrastructure to achieve comparable revenue growth in the range of 6% to 9% leveraging ongoing growth opportunities and a relentless.
Roland Busch: Today, Siemens is delivering faster growth and higher profitability at the same time. Our cash generation is stronger and more consistent than ever, and we have further strengthened our rock-solid balance sheet. We have allocated capital stringently to our shareholders, while investing for profitable growth at the same time. Beyond that, we have been continuously optimizing our portfolio and have reduced complexity. At our capital market day back in 2021, we challenged ourselves. We set ambitious targets with an upgraded financial framework, and we delivered. For comparable growth and revenue, we had set out to achieve a compound annual growth rate, so-called CAGR, of 5% to 7%, and we delivered 8%. For EPS, before purchase price allocation accounting, we reached a CAGR of 15%. At 16.2%, our average capital efficiency over the cycle stayed within our target band of 15% to 20%.
Speaker #1: The profit margin of 8.5% reflects a less favorable business mix compared to the prior year's fourth quarter. In terms of cash generation, Mobility followed through on its commitment and delivered an excellent €1.4 billion of free cash flow in the fourth quarter.
Its focus on productivity, we anticipate that's not infrastructure will achieve a profit margin within the range of 18% to 19%.
Speaker #1: The strong year-end finish pushed fiscal 2025 free cash flow to more than €1 billion, and a cash conversion rate of 0.93.
For the first quarter, we expect its ice comparable revenue growth rate to be within the full year guidance range.
Speaker #1: This result is well in line with our one minus growth target . As you know , mobility has an attractive asset light business model and has delivered consistently healthy cash flows and conversion for many years over the last 12 years , mobility .
Considering seasonal effects on exchange rate headwinds, we anticipate that the first quarter profit margin will be pillow as ice annual guidance range. Nevertheless, as I has the potential for another quarter of year over here margin expansion.
Speaker #1: Mobility is growing . Top line generated a cumulative profit , which €10.2 billion of resulted in €9.9 billion of free cash flow . With that , Siemens Mobility is a clear industry benchmark in terms of profitability and free cash flow conversion for We fiscal 26 .
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Now, let's move to mobility.
Mobility closed a strong fiscal 'twenty five on a positive note and with excellent free cash flow at 22.5 billion euros orders remained below the strong prior year level due to a lower volume from large orders however, going forward into fiscal 'twenty six the order pipeline.
Roland Busch: As promised, our capital structure did not exceed 1.5x. Another tremendous success was cash generation, where we accomplished free cash flow all in of EUR 46.7 billion throughout that cycle and have achieved also a very strong cash conversion rate of 1.20x since 2021. Finally, we announced that we would pursue a progressive dividend policy, and our dividend has grown at a CAGR of 9% since back then. Beyond executing on our group targets, we also drove our transformation. We delivered on strategic initiatives as promised. As I mentioned earlier, our SaaS transition is nearing completion, and we clearly exceeded our initial targets. Annual recurring revenue, or ARR, in DI software has grown 13% on average. The cloud share of ARR is now close to 50%. This result has been achieved well ahead of the initial schedule.
Speaker #1: Do that assume both comparable revenue growth and profit margin will be within the corridor of 8% to 10% for the first quarter.
Speaker #1: We anticipate revenue growth and margin within the same corridor. Now, as I mentioned, I couldn't be more proud of our €5.3 billion of free cash flow.
Looks very promising again mobility as order backlog stands at 52 billion euros.
And it has a very healthy gross margin improved over the prior year level.
Speaker #1: Cash all in for the Siemens Group. This was not only an all-time high for a quarter, but it also pushed our fiscal 2025 free cash flow to a record of €10.8 billion.
As indicated previously revenue of $3 2 billion Euro.
Euros developed flattish on tough comps the rolling stock and customer services business came in below the a strong level of the prior year quarter and outweighed growth in rail infrastructure.
Speaker #1: This success is strength the across entire industrial business landscape , each of which delivered more than €1 billion by themselves . A clear testament of the strength and dedication of the entire team .
The profit margin of eight 5% reflects a less favorable business mix compared to the prior year's fourth quarter in terms of cash generation mobility, followed through on its commitment and delivered an excellent 1.4 billion euros of free cash flow in the fourth quarter. The strong year end finish pushed fiscal two.
Speaker #1: Siemens. This record performance resulted in an outstanding cash return of 13.7%, and it marked the sixth consecutive year of double-digit free cash flow return on sales.
Roland Busch: In addition, we simplified our structure by divesting portfolio companies that were no longer core activities. More on that in a few minutes. Year by year, we have been making progress towards an even leaner, more effective governance. We are achieving these improvements by consistently supporting our strong growth in operations with an adequate level of highly efficient resources in support and governance functions. In addition, we want the fees we receive for the use of the Siemens brand to fully offset our governance cost. Now, we can confirm that we expect to reach net zero governance cost in fiscal 2026, as promised. Team Siemens can point to an impressive achievement in recent years. These successes also clearly show that we have further strengthened our excellent financial foundation. Our outstanding free cash flow generation, which is unique in our industry, is a crucial part of this rock-solid foundation.
25 free cash flow to more than 1 billion euros and a cash conversion rate of <unk> 93. This result is well in line with our one minus growth target.
Speaker #1: Continuing to build on this industry-leading track record remains our clear ambition. Now, let me use this opportunity to highlight the most relevant assumptions for our fiscal 2026 outlook.
As you know mobility has an attractive asset light business model and has delivered consistently healthy cash flows and conversion for many years over the last 12 years mobility Moby.
Speaker #1: We do assume that the global economic environment will stabilize, and that global GDP growth will remain near prior year levels as a percentage of revenue. We will remain.
Speaker #1: We will maintain R&D and SG&A at similar levels as in fiscal 2025. These investments will help drive even stronger customer focus, faster innovations, and higher profitable growth.
The latest growing top line generated a cumulative 10 2 billion euros of profit, which resulted in 9.9 billion euros of free cash flow with that Siemens mobility is a clear industry benchmark in terms of profitability and free cash flow conversion.
Speaker #1: To support further momentum , we will also increase CapEx to optimize our global footprint and expand capacity in targeted growth fields . Severance costs are expected to be in the range of 350 to €400 million , significantly below fiscal 25 , up to half of the group's total 26 severance expenses are expected to occur at Digital Industries .
For fiscal 'twenty six we do assume that both comparable revenue growth and profit margin will be within the corridor of 8% to 10%.
For the first quarter, we anticipate revenue growth and margin within the same corridor.
Now as I mentioned I couldnt be more proud of our 5.3 billion euros of free cash flow all in for the Siemens Group. This was not only an all time high for a quarter, but also pushed our fiscal 'twenty five free cash flow to a record of 10.8 billion euros. This.
Roland Busch: I'm particularly proud that for six years in a row, we have achieved a double-digit free cash flow return on sales. Free cash flow is the ultimate yardstick for any business's performance, and it has been and will be a key enabler for our prudent capital allocation. On top, I'm very pleased to see that rating agencies recognize our strong cash generation, and resilient business model. Our industry-leading credit ratings by Moody's, and Standard & Poor's reflect their trust in this regard. Of course, we want our shareholders to participate in our financial strength. Between 2021 and 2025, we paid EUR 17 billion in dividends to our shareholders, and we delivered on our promise to pursue a progressive dividend policy. As I mentioned earlier, for fiscal 2025, we are proposing a dividend of EUR 5.35. This will put our progressive dividend on a remarkable trajectory.
Speaker #1: We will continue working on ongoing capacity adjustments. Of course, particularly in the automation business, and on ensuring competitiveness across our entire business scope.
Speaker #1: Unfortunately, we have to expect exchange rates to be a strong burden for fiscal 2026. Based on current U.S. dollar forward rates in the market, we see a negative translation impact of around 4% on our top line and 50 basis points on our industrial margin.
This is attributable to strength across the entire industrial business landscape.
Each of which delivered more than 1 billion euros by themselves. The clear Testament of the strength and dedication of the entire team Siemens.
Speaker #1: do expect We this impact to convert into headwind of a around 70% €80 cents for EPs . Prepay . Now , let me share our assumptions for the line items below .
This record performance resulted in an outstanding cash return of 13, 7%.
And it marked the sixth consecutive year of double digit free cash flow return on sales.
Speaker #1: Industrial businesses. We expect governance costs to be net zero of brand fees, in line with the target we set for ourselves at the last Capital Market Day back in '21.
Continuing to build on this industry, leading track record remains our clear ambition.
Now let me use this opportunity to highlight the most relevant assumptions for fiscal 'twenty six outlook, we do assume that the global economic environment will stabilize and that global GDP growth will remain near prior year levels.
Speaker #1: Innovation costs will be broadly comparable to the prior year level and will reflect investments related to our one tech company program . As outlined from Roland Financing Elimination and others depend on portfolio topics , of course , and we expect them to be roughly on the prior year level .
Roland Busch: It has been growing at a CAGR of 9% since fiscal 2020, as mentioned before. We have also meaningfully accelerated our current five-year EUR 6 billion share buyback program. It has been running well, ahead of schedule, and at an attractive average price of EUR 198 so far. While providing these attractive shareholder returns, we have been simultaneously investing in future profitable growth. To expand on our position of technological leadership, we have maintained a peer-leading R&D ratio of 8%, with expenditures of EUR 29 billion over the last five years. In addition, we have further strengthened our well-balanced global footprint by making targeted CapEx investments totaling EUR 12 billion. Finally, we have selectively expanded our portfolio by investing in inorganic growth. Over the last five years, we enhanced our portfolio with several bolt-on acquisitions, and three larger acquisitions, for a grand total of EUR 32 billion.
As a percentage of revenue we will remain we will maintain R&D and SG&A at similar levels as in fiscal 'twenty five.
Speaker #1: Again, and finally, we assume a tax rate of 23% to 27%. I have already described our fiscal 2026 assumptions for our industrial businesses on the Siemens Group level.
These investments will help drive even stronger customer focus faster innovations and higher profitable growth.
Further support momentum, we will also increase capex to optimize our global footprint and expand capacity in targeted growth fields.
Speaker #1: We expect 6 to 8% comparable growth . We again anticipate a book to bill ratio above one . We expect EPs prepay in a range of €10.40 to €11 in fiscal year 26 , this range reflects material negative impact from exchange rate .
Severance cost I expect it to be in the range of 350 to 400 million euros significantly below fiscal 'twenty five.
Up to half of the group's total 26 severance expenses I expect it to occur at digital industries. We will continue working on ongoing capacity adjustments of course, particularly in the automation business and on ensuring competitiveness across our entire business.
Speaker #1: As mentioned before , and compares to a fiscal year 25 amount of €10.31 , which includes effects from Althea and Dotmatics . As always , this outlook excludes burdens from regal and regulatory matters .
Unfortunately, we have to expect exchange rates to be a strong burden for fiscal 'twenty six.
Speaker #1: So, in a nutshell, we are entering fiscal 2026 from a clear position of strength and with a very ambitious outlook. Now let's move to the second part of my presentation for today.
Based on current U S dollar forward rates in the market, we see a negative translation impact of around 4% on our topline and 50 basis points on our industrial margin. We do expect this impact to convert into a headwind of around 70 to 80 Euro cent for E. P. S.
Roland Busch: For years now, we have been simplifying our portfolio and sharpening its focus. By spinning off Siemens Energy, we created a unique and leading player in the energy market. Despite its bumpy start, Siemens Energy has become a poster child for crystallizing value. Its market cap is now five times higher than at the time of its listing in September 2020. Meanwhile, we have taken several steps towards phasing out our investment, as announced from the very beginning. This way, we have realized around EUR 3 billion in cash proceeds. We also materially strengthened our pension assets by contributing more than EUR 3 billion to our pension fund. Our stake in Siemens Energy currently stands at 10.1%. We remain committed to fully exiting Siemens Energy in a meaningful time frame, and by being mindful of market conditions. In addition, we have successfully divested our former portfolio companies.
Speaker #1: And first, a review of and status update on the transformation that we have been driving successfully in recent years. And then a look ahead for our financial ambitions and priorities for the future.
The PPA.
Now, let me share our assumptions for the line items below industrial businesses.
We expect governance cost to be net zero of brand fees in line with the target we set to ourselves last capital market day back in 'twenty, one innovation cost will be broadly comparable to the prior year level and will reflect investments related to our one Tech company program as outlined from Roche.
Speaker #1: start by Let's looking back quickly as at the substantial value Siemens has been creating in the five years since Roland took office as president and of Siemens AG CEO , Siemens is an excellent shape and has been transforming successfully .
And <unk>.
Speaker #1: Our teams have manoeuvred Siemens very well through a period of market of really marked by volatility markets and geopolitical challenges . All this resulted in a 151% total shareholder return since the beginning of fiscal 21 .
Financing elimination and others depend on portfolio tropics of course, and we expect them to be roughly on the prior year level again, and finally, we assume a tax rate of 23% to 27%.
I have already described our fiscal 'twenty six assumptions for our industrial businesses on the Siemens group level, we expect 6% to 8% comparable growth.
Roland Busch: Implementing a private equity-style value creation approach proved to be very effective. We executed full potential plans and pursued strategic options. Over time, using tailor-made approaches, we found the best owners for each and every one of those companies. In total, the portfolio company divestments generated more than EUR 7 billion in enterprise value. Siemens Healthineers has been a separately listed company since its initial public offering in March 2018. The strategic rationale for that IPO was opening the business for new investors while preparing for a bold consolidation move. Healthineers made such a move a few years later by acquiring Varian Medical Systems, as you know. The integration of Varian has been going very well. We have now reached the perfect moment to take a major transformational step again.
Speaker #1: Clearly over and above industry leading levels today , Siemens is delivering faster growth and higher profitability at the same time , our cash generation is stronger and more consistent than ever , and we have further strengthened our rock solid balance sheet .
Can anticipate a book to bill ratio above one we expect EPS pre PPA and a range of 10 Euro 40 cents to 11 euros in fiscal year 'twenty. Six this range reflects material negative impact from exchange rate as mentioned before.
Speaker #1: We have allocated capital stringently to our shareholders while investing for profitable growth at the same time. Beyond that, we have been continuously optimizing our portfolio and have reduced complexity. At our Capital Markets Day back in '21, we challenged ourselves.
And compares to fiscal year 'twenty five amount of 10 Euro and 31 cents, which includes effect from Altair and dogmatics as always this outlook excludes burdens from legal and regulatory matters. So in a nutshell, we are entering fiscal 'twenty six from a career.
Speaker #1: We set ambitious targets with an upgraded financial framework , and we delivered for comparable growth and revenue . We had set out to achieve a compound annual growth rate , so-called CAGR of 5 to 7% .
Your position of strength and with an very ambitious outlook.
Speaker #1: We delivered 8% for EPS before purchase price allocation accounting, reaching a peak of 15% at 16.2%. Our average capital efficiency over the cycle stayed within our target band of 15% to 20%.
Now.
Let's move to the second part of my presentation for today.
Roland Busch: As Roland outlined, deconsolidating Siemens Healthineers will align our portfolio even more closely with exciting growth drivers of automation, digitalization, electrification, sustainability, and AI. Now, it's also time to shift gears as one tech company to go for the next level of performance. Roland already did explain the growth trajectory. We want to leverage opportunities from operating in attractive markets that have promising adjacencies. We will expand our share of digital businesses even further and faster. As a result, we are upgrading our revenue growth target to the range of 6% to 9%. We continue to expect our EPS pre-PPA to grow faster than revenue. Increasing profitability in our industrial businesses over the next few years will drive this development. On top, we will maintain our high level of ambition for our other midterm targets according to our financial framework for the group.
First.
Redo of and status update on the transformation that we have been driving successfully in recent years and then a look ahead for our financial ambitions and priorities for the future.
Speaker #1: And as promised, our capital structure did not exceed 1.5 times another. Tremendous success was cash generation, where we accomplished free cash flow all in of €46.7 billion.
Let's start by looking back quickly as at the substantial value Siemens has been creating in the five years since Roland took office as president and CEO of Siemens AG Siemens is in excellent shape and has been transforming successfully.
Speaker #1: Throughout that cycle , and have achieved also a very strong cash conversion rate of 1.2 since 2021 . Finally , we announced that we would pursue a progressive dividend policy and our dividend has grown at a kegger of 9% since back then .
Our teams have maneuvered Siemens very well through a period of market.
Really marked by volatility markets and geopolitical challenges all of this resulted in a 151% total shareholder return since the beginning of fiscal 'twenty, one clearly over and above industry leading levels.
Speaker #1: Beyond executing group targets , on our we also drove our transformation . We delivered on strategic initiatives as promised . As I mentioned earlier , our SaaS transition is nearing completion and we clearly exceeded our initial targets .
Today, Siemens is delivering faster growth and higher profitability at the same time, our cash generation is stronger and more consistent than ever and we have further strengthened our rock solid balance sheet.
Speaker #1: Annual recurring revenue, or ARR in the software sector, has grown 13% on average. The cloud share of ARR is now close to 50%.
Speaker #1: This result has been achieved well ahead of the initial schedule. In addition, we simplified our structure by divesting portfolio companies that were no longer core activities.
We have allocated capital stringently to our shareholders, while investing for profitable growth at the same time.
Roland Busch: I will go into the details for those metrics in a minute. Incremental growth and profitability in our industrial businesses are driving continued high single-digit growth in EPS pre-PPA. As part of our One Tech Company program, we are initiating steps to take our company to the next level of performance. In terms of our markets and portfolio, we are continuing to grow our digital business, and grow in the most attractive regions, and the most promising verticals, as Roland pointed out. These measures will structurally improve our growth and margin profiles. While our go-to-market can be distinct for different markets and business models, our teams will use one sales fabric. Standardizing and sharing information and tools will ultimately lead to better resource allocation. Our businesses will also benefit from one technology fabric. We will build technologies and services once, and leverage them across the entire organization.
Beyond that we have been continuously optimizing our portfolio and have reduced complexity.
Speaker #1: on More that in a few minutes . Year by year , been we have making progress an even towards leaner and more effective governance .
At our capital market day back in 'twenty, one we challenged ourselves we set ambitious targets with an upgraded financial framework.
Speaker #1: We are achieving these improvements by consistently supporting our strong growth in operations with an adequate level of highly efficient resources in support and governance functions.
And we delivered.
For comparable growth in revenue, we had set out to achieve a compound annual growth rate, so called CAGR of 5% to 7% and we delivered 8% for EPS before purchase price allocation accounting reached a CAGR of 15% at 16, 2% our average <unk>.
Speaker #1: In addition , we want the fees we receive for the use of the Siemens brand to fully offset our governance costs . Now , we can confirm that we expect to reach net zero governance costs in fiscal 26 .
Capital efficiency over the cycle stayed within our target band of 15% to 20% and as promised our capital structure did not exceed one five times.
Speaker #1: As promised , team Siemens can point to an impressive achievement in recent years , and these successes also clearly show that we have further strengthened our excellent financial foundation , our outstanding free cash flow generation , which is unique in our industry , is crucial part of this rock solid foundation .
Another tremendous success was cash generation will be accomplished free cash flow all in a 46.7 billion euros.
Throughout that cycle and have achieved also a very strong cash conversion rate of one point to <unk>. Since 2021, finally, we announced that we would pursue a progressive dividend policy and our dividend has grown at a CAGR of 9% since back that beyond executing.
Roland Busch: This approach will, for example, boost productivity in software development company-wide. On top, we are establishing one data fabric for all of Siemens. This step is crucial for driving advances in areas such as powerful AI usage. In the end, it will help to optimize our processes even further. All in all, we are building an efficient, optimal environment to enable our businesses to focus sharply, and innovate faster. These levers will help in lifting our businesses more and more so that they can realize their full potential. At Digital Industries, our industry-leading and unique portfolios enable us to leverage opportunities in our markets, and drive customer impact. In the AI software business, we are about to finalize our SaaS transition. As a result, we are expecting tailwind for growth and profitability going forward. The teams have created a stable, high-performing operating model.
Speaker #1: I'm particularly proud that for six years in a row, we have achieved a double-digit free cash flow return on sales. Free cash flow is the ultimate yardstick for any business's performance, and it has been, will be, and will continue to be a key enabler for our prudent capital allocation on top.
On our group targets, we also drove our transformation.
Speaker #1: I’m very pleased to see that agencies recognize our strong cash generation and resilient business model. Our industry-leading credit ratings by Moody's and Standard & Poor's reflect their trust in this regard.
We delivered on strategic initiatives as promised as.
As I mentioned earlier, our SaaS transition is nearing completion, and we clearly exceeded our initial targets annual recurring revenue or a R. R. NPI software has grown 13% on average the cloud chair of a R is now close to 50%.
Speaker #1: course , And of we want our shareholders to participate in our financial strength . Between 21 and 25 , we paid €17 billion in dividends to our shareholders , and we delivered on our promise to pursue a progressive dividend policy .
This result has been achieved well ahead of the initial schedule. In addition, we simplified our structure by divesting portfolio companies that were no longer core activities born that in a few minutes.
Year by year, we have been making progress toward an even leaner and more effective governance. We are achieving these improvements by consistently supporting our strong growth in operations with an adequate level of highly efficient resources in support and governance functions. In addition, we want the fees.
Speaker #1: As I mentioned earlier , for fiscal 25 , we are proposing a dividend of €5 and €35 cents . This will put our progressive dividend on a remarkable trajectory .
Roland Busch: Overall, profitability in this business will benefit from stringent integration of the recent Altair and Dotmatics acquisitions, and continued productivity efforts. In the AI automation business, we are strengthening our sales teams by reducing back-office work and doubling the share of quota-carrying, customer-facing salespeople. We will also further boost digitalization and vertical offerings. On top, we are rigorously executing ongoing productivity programs to drive margin expansion. You know, and they know, that I'm exceptionally proud of how the team at Siemens Infrastructure has delivered on their commitments since the last capital market day back in 2021. Not many believed in their ambitious targets back then. Yet, smart infrastructure proved what can be achieved with a good plan, intense dedication, and strong execution capabilities in an attractive market environment. SI's track record is speaking for itself. The team has now achieved the 20th quarter of year-over-year operational expansion in a row.
Speaker #1: It has been at has been growing at a CAGR of 9% since fiscal 2020 . As mentioned before , we have also meaningfully accelerated our current five year , 6 billion share buyback program .
We received for the use of the Siemens brand to fully offset our governance costs now we can confirm that we expect to reach net zero governance costs in fiscal 'twenty six as promised.
Speaker #1: It has been running well ahead of schedule and at an attractive average price of €198 so far. While providing these attractive shareholder returns, we have been simultaneously investing in future profitable growth to expand on our position of technological leadership.
Tim Siemens 10 points to an impressive achievement in recent years and these successes also clearly show that we have further strengthened our excellent financial Foundation.
Speaker #1: have maintained We a peer leading R&D ratio of 8% , with expenditures of €29 billion over the last five years . In addition , we have further strengthened our well-balanced global by footprint making targeted CapEx investments totalling €12 billion .
Our outstanding free cash flow generation, which is unique in our industry is crucial part of this rock solid foundation I'm, particularly proud that for six years in a row, we have achieved a double digit free cash flow return on sales free cash flow is the ultimate yardstick for any business is performance and it has.
Speaker #1: finally , And we have selectively expanded our portfolio by investing in inorganic growth over the last five years . We enhanced our portfolio with several bolt on three larger acquisitions and acquisitions for a grand total of €32 billion .
And will be a key enabler for our prudent capital allocation.
On top I'm very pleased to see the debt rating agencies recognize our strong cash generation and resilient business model our industry leading trade.
Speaker #1: For years now, we have been simplifying our portfolio and sharpening its focus by spinning off Siemens Energy. We created a unique and leading player in the energy market.
Roland Busch: SI's margin was north of 18% for fiscal 2025. Looking ahead, we expect Smart Infrastructure to continue to expand their margin. A year ago, at SI's capital market event in Zug, Switzerland, we outlined the strong market positions of SI businesses, and their levers for further profitable growth. Those key levers are targeted capacity expansion to execute on the strong order backlog, intensifying expansion into high-growth regions and verticals, and driving growth of digital business, and relentlessly improving productivity in operations on even higher levels than before. As I mentioned earlier, Siemens Mobility is the industry benchmark when it comes to terms of profitability and cash conversion. Mobility achieved this performance level by prudently managing risks and opportunity time and again.
Ratings by Moodys and standard and Poors reflect their trust in this regard and of course, we want our shareholders to participate in our financial strength.
Speaker #1: Despite its bumpy start, Siemens Energy has become a poster for crystallizing value. Its market cap is now five times higher than at the time of its listing in September 2020.
Between 'twenty, one and 25, we paid 17 billion euros in dividends to our shareholders and.
Speaker #1: Meanwhile, we have taken several steps towards phasing out our investment, as announced from the very beginning. This way, we have realized around €3 billion in cash proceeds.
And we delivered on our promise to pursue a progressive dividend policy as I mentioned earlier for fiscal 'twenty. Five we are proposing a dividend of five year run 35 Euro cents. This will put our progressive dividend.
Speaker #1: We also materially strengthened our pension assets by contributing more than €3 billion to our pension fund. Our stake in Siemens Energy currently stands at 10.1%.
On a remarkable trajectory it has been at a Kate has been growing at a CAGR of 9% since fiscal 2020 as mentioned before we have also meaningfully accelerated our current five year 6 billion share buyback program. It has been running well ahead of schedule and at an attractive average price of 109.
Speaker #1: We remain committed to fully exiting Siemens Energy in a meaningful time frame and by being mindful of market conditions. In addition, we have successfully divested our former portfolio companies, implementing a private-style value equity creation approach that has proven to be very effective.
<unk> eight euros so far.
Roland Busch: We are proud of how the whole Mobility team has been maintaining their enduring commitment to our customers to deliver our orders on time, at the right quality, and within budget. The teams will continue to work on increasingly shifting Mobility's business mix towards accretive profit pools in services, software, and platform businesses. Diligent capacity ramp-up and enhanced productivity will be key focal points for Mobility, on top of maintaining the highest quality standards. Now, let me turn to the group perspective. I want to once again strongly emphasize our continuing commitment to profitable growth by rigorously implementing our One Tech Company program. We have achieved a very attractive trajectory for earnings growth in recent years. By pulling all levers I just discussed, we aim to continue this momentum and grow EPS pre-PPA by a high single-digit percentage.
By providing these attractive shareholder returns we have been simultaneously investing in future profitable growth to expand on our position of technological leadership, we have maintained our peer leading R&D ratio of 8% with expenditures of 29 billion euros over the last five years.
Speaker #1: We executed full potential plans and pursued strategic options over time, and using tailor-made approaches, we found the best owners for each and every one of those companies.
Speaker #1: In total, the portfolio company divestments generated more than €7 billion in enterprise value. Siemens Healthineers has been a separately listed company since its initial public offering on March 28.
In addition, we have further strengthened our well balanced global footprint by making targeted capex investments totaling 12 billion euros and finally, we have selectively expanded our portfolio by investing in inorganic growth over the last five years, we enhanced our portfolio with several bolt on acquisitions and three <unk>.
Speaker #1: The strategic rationale for that IPO was opening the business for new investors . While preparing for bold consolidation move , Healthineers made such a move a few years later by acquiring Varian Medical As you know , Systems .
Larger acquisitions for a grand total of 32 billion euros.
For years now we have been simplifying our portfolio and sharpening its focus.
Speaker #1: the integration of Varian has been going very well . We have reached the now perfect moment to take a major transformational step again , as Roland outlined , the consolidating Siemens Healthineers will align our portfolio even more closely with exciting growth drivers of automation , digitalization , electrification , sustainability and AI .
By spinning off Siemens energy, we created a unique and leading player in the energy market.
Despite its bumpy start Siemens energy has become a poster child for crystallizing value. Its market cap is now five times higher than at the time of its listing in September 2020.
Roland Busch: In fiscal year 2025, EPS pre-PPA came in at EUR 10.71, excluding the effects from the Altair and Dotmatics acquisitions, which closed significantly earlier than originally expected. Including Altair and Dotmatics, EPS pre-PPA was EUR 10.31. For fiscal 2026, we expect EPS pre-PPA to be in the range of EUR 10.40 to 11.00, as I outlined earlier. We are extremely proud of continuously achieving double-digit free cash flow margins. This multi-year track record is the fact-based result of a cash mindset that is deeply embedded across the entire organization of Siemens, and of maintaining a corresponding incentive system, of course. We are very confident that we are well-positioned to continue this strong streak. Of course, excellent cash generation is a key pillar of our rock-solid balance sheet. However, there's more to it.
Meanwhile, we have taken several steps towards phasing out our investment as announced from the very beginning this way we have realized around 3 billion euros in cash proceeds we also materially strengthened our pension assets by contributing more than 3 billion euros to a pension fund.
Speaker #1: And now it's also time to shift gears as one tech company to go for the next level of performance. Roland already did explain the growth trajectory.
Speaker #1: We want to leverage opportunities from operating in attractive markets that have promising adjacencies , and we will expand . We will expand our share of digital businesses even further , and faster as a result , we are upgrading our revenue growth target to the range of 6 to 9% , and we continue to expect our EPs to grow faster than revenue , increasing profitability in our industrial businesses over the next few years will drive this development on top .
I was taken Siemens energy currently stands at 10, 1%.
We remain committed to fully exiting Siemens energy in a meaningful timeframe and by mindful being mindful of market conditions.
In addition, we have successfully divested our former portfolio companies.
Implementing a private equity style of value creation approach proved to be very effective.
We executed full potential plans and pursued strategic options over time and using tailor made approach as we found the best owners for each and every of those companies.
Speaker #1: We will maintain our high level of ambition for our other mid-term targets, according to our financial framework for the group. I will go into the details for those metrics in a minute.
In total the portfolio company divestments generated more than 7 billion euros and enterprise value.
Roland Busch: For example, an all-time low in pension provisions, as well as cash inflows from the recent sale of stakes in listed companies, and extremely important, prudent capital allocation. It goes without saying that we aspire to maintain our rock-solid balance sheet and our industry-leading credit ratings. We know that return on capital employed is a key metric for our investors. It provides a clear picture of how efficiently we are using capital to generate profitable growth and create long-term value for our company's owners. As promised at our capital market day back in 2021, we entered our target range for return on capital employed back in 2023. Since then, we have maintained within the upper half of that range. We are committed to maintaining a return on capital employed between 15% and 20%, even though we will face temporary headwinds for this metric from recent software acquisitions.
Speaker #1: Incremental growth and profitability in our industrial businesses are driving continued high single-digit growth in EPS and PPA, as part of our Company’s One Tech program.
Siemens health and it has been a separately listed company since its initial public offering in March 28.
Fatigue rationale for that IPO was opening the business for new investors, while preparing for a bold consolidations.
Speaker #1: We are initiating steps to take our company to the next level of performance in terms of our markets and portfolio. We are continuing to grow our digital business and expand in the most attractive regions and the most promising verticals.
Health and he has made such a move a few years later by acquiring Varian medical systems. As you know the integration of Varian has been going very well. We have now reached the perfect moment to take a major transformational step again.
Speaker #1: As Roland pointed out , these will measures structurally improve our growth and margin profiles while our go to market can be distinct for different markets and business models , our teams will use one sales fabric , standardizing and sharing information and tools will ultimately lead to better resource allocation .
As Roland outlined the consolidating Siemens health and years will align our portfolio, even more closely with exciting growth drivers of automation digitalization electrification sustainability and AI.
Speaker #1: Our businesses will also benefit from one technology fabric. We will build technologies and services once and leverage them across the entire organization.
And now it's also time to shift gears as one Tech company to go for the next level of performance.
Roeland already did explain the growth trajectory, we want to leverage opportunities from operating.
Roland Busch: I mentioned earlier how we have been balancing very attractive shareholder returns with focused investments. We will continue to strike this balance effectively. We are very confident in the trajectory of the new fabric for Siemens as one tech company, and we want our shareholders to benefit from reliable and sustainable returns. We reiterate our commitment to an attractive shareholder return, and a progressive dividend policy. We will stick to this policy even after deconsolidating Siemens Healthineers. To maintain our trajectory, if necessary, we will temporarily allow a higher payout ratio. In addition, share buybacks will remain a core pillar of shareholder return for Siemens investors. Of course, on top, the intended spinoff of 30% of Siemens Healthineers shares will benefit our shareholders directly and materially. Roland outlined the significant growth opportunities that we see in our markets.
Speaker #1: This approach will , for example , boost productivity in software development , company wide . On top , we are establishing one data fabric for all of Siemens .
In attractive markets that have promising adjacencies and we will expand we will expand our share of digital businesses, even further and faster as a result, we are upgrading our revenue growth target to the range of 6% to 9% and we continue to expect our EPS pre PPA.
Speaker #1: This step is crucial for driving advances in areas such as powerful AI usage. In the end, it will help to optimize our processes even further.
Speaker #1: All in all , we are building an efficient , optimal environment to enable our businesses to focus sharply and innovate faster . These levers will help in lifting our businesses more and more so that they can realize their full potential at digital industries , our industry leading and unique portfolios enable us to leverage opportunities in our markets and drive customer impact in the software business .
To grow faster than revenue.
Increasing profitability in our industrial businesses over the next few years will drive this development on top we will maintain our high level of ambition for our other midterm targets. According to our financial framework for the group I will go into the details for those metrics in a minute.
Incremental growth and profitability in our industrial businesses are driving continued high single digit growth in EPS pre PPA as part of our one Tech company program, we are initiating steps to take our company to the next level of performance.
Speaker #1: We are about to finalize our SaaS transition . As a result , we are expecting tailwind for growth and profitability going forward . The teams have created a stable , high performing operating model overall profitability in this business will benefit from stringent integration of the recent acquisitions and continued productivity efforts in the eyes of automation business , we are strengthening our sales teams by reducing back office work doubling the and share of quota carrying customer facing salespeople .
Roland Busch: You will hear more about them in our deep dive sessions this afternoon. To leverage these opportunities, we will continue to invest. We will maintain high R&D intensity to continue driving our technological leadership, and further growth. Our geographic footprint is well-balanced, and we will continue to optimize it through targeted capital expenditure. In addition, we will harvest selectively, invest selectively in value-creating acquisitions. All investment decisions will be based on our well-known and clearly defined strategic imperatives, and on prudent decision-making. Certainly, we will continue to monitor each M&A transaction closely based on specific criteria. Our aim is to ensure attractive returns, and ultimately strong value generation. Ladies and gentlemen, our markets are changing at a high pace, and Siemens is transforming rapidly to stay in the lead. Yet, our principles for value creation remain the same, and remain fully intact.
In terms of our markets and portfolio, we are continuing to grow our digital business and grow in the most attractive regions and the most promising verticals as roeland pointed out these measures will structurally improve our growth and margin profiles.
While our go to market can be distinct for different markets and business models. Our teams will use one sales fabric standardizing and sharing information and tools will ultimately lead to better resource allocation.
Speaker #1: also We will further boost digitalization and vertical offerings on top . We are rigorously executing ongoing productivity programs to drive margin expansion . You know and they know that I'm exceptionally proud of how the team at Siemens Infrastructure has delivered on their commitments since the last capital market day back in 21 , not many believed in their ambitious targets back then .
Our businesses will also benefit from one technology Patrick.
We will build technologies and services once and leverage them across the entire organization.
This approach will for example, boost productivity and software development company wide.
On top we are establishing one data fabric for all of Siemens. This step is crucial for driving advances in areas such as powerful AI usage in.
Speaker #1: Yet smart infrastructure proved what can be achieved with a good plan, intense dedication, and strong execution capabilities in an attractive market environment.
In the end it will help to optimize our processes. Even further all in all we are building an efficient optimal environment to enable our businesses to focus sharply and innovate faster. These.
Speaker #1: As I track record is speaking for itself . has now The team achieved the 20th quarter of year over year operational expansion in a row and as I was margin north of 18% for fiscal 25 .
Roland Busch: You can rely on stringent capital allocation and strong cash generation to drive operational performance at Siemens. You can rely on Siemens continuing to deliver very attractive and sustainable shareholder returns. Along the way, we will ensure that rigorous execution, transparency, and compliance remain paramount. Roland and I, the managing board, and the entire team Siemens are all fully committed to further accelerating value creation as one tech company, Siemens. Thank you. Welcome back for the Q&A with Roland and Ralf. Let me start with a few housekeeping items. If you have a question, please raise your hand. To ensure we can hear you clearly, we ask that you use the microphone placed on the table in front of you. Please turn it on when asking your question.
These levers will help in lifting our business as more and more so that they can realize their full potential.
Speaker #1: Looking ahead, we expect smart infrastructure to continue to expand their margin. A year ago, at the Ice Capital Market event in Zouk, Switzerland, we outlined the strong market positions of C businesses and their levers for further profitable growth.
At digital industries are industry, leading and unique portfolios enable us to leverage opportunities in our markets and drive customer impact and the ice software business. We are about to finalize our SaaS transition as a result, we are expecting tailwind for growth and profitability going forward.
Speaker #1: Those key levers are targeted capacity expansion to execute on the strong order backlog, intensifying expansion into high-growth regions and verticals, and driving growth of digital business while relentlessly improving productivity in operations to even higher levels than before.
The teams have created a stable high performing operating model overall profitability in this business will benefit from stringent integration of the reason the LTE and <unk> acquisitions and continued productivity efforts in.
Speaker #1: Now , as I mentioned earlier , Siemens Mobility is the industry benchmark when it comes to terms of profitability and cash conversion . Mobility achieved this performance level by prudently managing risks and opportunity time and again .
In the eyes automation business, we are strengthening our sales teams by reducing back office work and doubling the share of quota carrying customer facing salespeople. We will also further boosted utilization and vertical offerings on top we are rigorously executing ongoing productivity programs.
Speaker #1: We are proud of how the whole mobility team has been maintaining their enduring commitment to our customers, to deliver our orders on time, at the right quality, and within budget.
Roland Busch: To give as many people as possible the opportunity to participate, please limit yourselves to two questions. Chris and I will moderate and take questions from both journalists and analysts. We would start with the first questions from the analysts. First question, James Moore, first row. Thank you, Tobias. It's James Moore from Rolf, Charles & Co. Morning. Thanks for all the information and Healthineers and the great growth outlook. I guess my question's about profitability, in particular DI. If we're going to do high single-digit growth at the group level, I know you talked about the ambition of earnings above that, but if we're high single-digit growth for earnings, there's not a lot in there for margin expansion over time, and normally record growth would drive some operational gearing.
To drive margin expansion.
You know and they know.
Speaker #1: The teams will continue to work on increasingly shifting mobility, with a business mix towards accretive profit pools in services, software, and platform businesses. Diligent capacity ramp-up and enhanced productivity will be key focal points for mobility.
That I'm exceptionally proud of how the team at Siemens infrastructure has delivered on their commitments since the last capital market day back in 'twenty one.
Not many believed and they're ambitious targets back then yet.
Not infrastructure proved what can be achieved with a good plan intense dedication and strong execution capabilities in an attractive market environment.
Speaker #1: On top of maintaining the highest quality standard . Now , let me turn to the group perspective . I want to once again , strongly emphasize our continuing commitment to profitable growth by rigorously implementing our one tech company program , we have achieved a very attractive trajectory for earnings growth in recent years by pulling all levers , I just discussed , we aim to continue this momentum and grow EPs prepay by a high single digit percentage in fiscal year 25 , EPs prepay came in at €10.71 , excluding the from the effect acquisitions , which closed significantly earlier than originally expected , including Althea and EPs .
As I track record speaks for itself. The team has now achieved the 20th quarter of year over year operational expansion in a row and this is margin was north of 18% for fiscal 'twenty five.
Roland Busch: Specifically in DI, I imagine you should have some tail-of-the-fish benefits, some productivity, some of the benefits from severance, and a positive economic equation. I just wondered if you could help us with what's on the negative side of the ledger, apart from currency, which you've been clear on. In particular, does the two billion of AI investment, sorry, the billion of AI investment, whatever the number is, does that have an impact on the P&L? Thank you, James, for giving me an opportunity to clarify a bit. I know that some of you may consider the guidance for DI margin conservative. I would rather qualify it as prudent. We clearly said and also experienced that part of the market is not yet bouncing back V-shape-like to investment sentiments.
Looking ahead, we expect smart infrastructure to continue to expand their margin a year ago as ice capital market event in Silicon, Switzerland, we outlined the strong market positions of ESI businesses and their levers for further profitable growth.
Those key levers are targeted capacity expansion to execute on the strong order backlog intensifying expansion into high growth regions, and verticals and driving growth of digital business and relentlessly improving productivity and operations on even higher levels than before.
Speaker #1: Prepay was €10.31 for fiscal 26 . We expect EPs to be in the range of €10.40 to €11 . As I outlined earlier , and we are extremely proud of continuously achieving double digit free cash flow margins .
Now as I mentioned earlier Siemens mobility is the industry benchmark when it comes to terms of profitability and cash conversion.
Speaker #1: This multi-year track record is the fact-based result of a cash mindset that is deeply embedded across the entire organization of Siemens and of maintaining a corresponding incentive system.
Mobility achieved this performance level by prudently managing risks and opportunity time and again, we are proud of how the whole mobility team has been maintaining their enduring commitment to our customers to deliver our orders on time at the right quality and within budget.
Roland Busch: Therefore, we do expect, on top of exchange rate and also on top of the extraordinary integration that we mentioned, and severance, which will be pretty much 50% of that, would be guided for the entire company for fiscal 2026. On top of that, we'll see quite a couple of challenges developing through the first couple of months in the market. We do see momentum there. They are doing their homework, but also please bear in mind that severance being booked does not implicitly mean that all the impact is immediately popping up. That will take time to materialize. We want the company to stand on firm ground and also learn from history. Therefore, I would call it prudent and not conservative. Let me talk about the I investment.
Speaker #1: Of course , we are very confident that we are well positioned to continue this streak . And of course cash , excellent generation is a key pillar of our rock solid balance sheet .
The teams will continue to work on increasingly shifting mobility business mix towards accretive profit pools and services software and platform businesses.
Speaker #1: However , there's more to it for example , an all time low in pension provisions as well as a cash inflows from the recent sale of stakes in listed companies and extremely important prudent capital allocation .
It shouldn't capacity ramp up and enhanced productivity will be key focal points for mobility on top of maintaining the highest quality standard.
Speaker #1: And it goes without saying that we aspire to maintain our solid rock balance sheet and our leading credit industry ratings. We know that return on capital employed is a key metric for our investors.
Now, let me turn to the group perspective, I want to once again strongly emphasize our continuing commitment to profitable growth by rigorously implementing our one Tech company program.
Speaker #1: It provides a clear picture of how efficiently we are capitalizing on our ability to generate profitable growth and create long-term value for our company's owners.
We have achieved a very attractive trajectory for earnings growth in recent years.
By pulling all levers I just discussed we aim to continue this momentum and grow EPS pre PPA by a high single digit percentage in fiscal year 'twenty five EPS pre PPA came in at 10 euros and 71 cents executing the effects from the Altair and dogmatics acquisitions, which closed.
Roland Busch: This is basically an investment which goes across the company, but there's an increment of EUR 100 million, EUR 100 million plus, which you will find in the innovation below IV in that part. This is particular for the team, which was a filament. You will get to know him later. It's about to build up. This is only part of that. Other parts are, as you know, as I talked about, we have 1,500 AI experts across the company. We have many AI projects also in the businesses, but that is not increment. This is part of the R&D budget. A big question now from the press side. I saw Michael Fleming. Question from the press side. Any hands? Okay, great. I have two questions, please. I didn't raise my hand, but nevertheless, I will take the chance. You're volunteered. You're volunteered.
Speaker #1: As promised at our Capital Market Day back in 2021, we have established our target range for return on employed back capital since we have entered 2023.
Speaker #1: maintained within the upper half of that We are committed to maintaining a rosy between 15 and 20% , even though will range . temporary headwinds for this metric from recent software acquisitions .
Significantly earlier than originally expected.
Including LTE Android Metics, EPS pre PPA was 10 euros and 31 cents for.
Speaker #1: I mentioned earlier how we have been balancing very attractive shareholder returns with focused investments, and we will continue to strike this balance effectively.
For fiscal 'twenty, six we expect EPS pre PPA to be in the range of 10 year of 40 cents to 11 euros as I outlined earlier.
And we are extremely proud of continuously achieving double digit free cash flow margins.
Speaker #1: We have confidence in the trajectory of the new fabric for Siemens as one tech company, and we want our shareholders to benefit from reliable and sustainable returns.
This multi year track record is the fact base resolve of our cash mindset that is deeply embedded across the entire organization of Siemens.
Speaker #1: We reiterate our commitment to an attractive shareholder return and a progressive dividend policy. We will stick to this policy even after deconsolidating Siemens Healthineers to maintain our trajectory, and if necessary, we will temporarily allow a higher payout ratio.
And of maintaining a corresponding incentive system of course.
We are very confident that we are well positioned to continue this strong streak.
Roland Busch: What complications do you have on the regulatory side for the deconsolidation of Healthineers? The second one, the share price today is 5% down. How do we interpret this reaction? Thank you. Yeah, thank you for your questions, Michael. Of course, too early to finally conclude on the share price development of today, but what I feel also from the responses and what we get as feedback, we made you drinking from a firehose. Many different aspects, levers floating around, and we are happy to have now an opportunity to clarify areas that may not have been coming across completely clearly. That is why we have a Q&A. I firmly believe that what we have to share today will have a very positive impact on the long-term value development of both Siemens AG and Siemens Healthineers shares, and also prospering opportunities from capital allocation in both companies.
Of course excellent cash generation is a key pillar of our rock solid balance sheet. However, there's more to it for example, an all time low in pension provisions as well as our cash inflows from the recent sale of stakes in listed companies and extremely important proof.
Speaker #1: In addition, share buybacks will be a core pillar of returning value to shareholders for remaining Siemens investors. And of course, on top of the intended spinoff of 30% of Siemens Healthineers shares, this will benefit our shareholders directly and materially.
And capital allocation.
Speaker #1: Roland outlined the significant growth opportunities that we see in our markets. You will hear more about them in our deep dive sessions this afternoon to leverage these opportunities.
And it goes without saying that we aspire to maintain a rock solid balance sheet and our industry, leading credit ratings. We know that return on capital employed is a key metric for our investors.
Speaker #1: We continue to invest. We will maintain high R&D intensity to continue driving our technological leadership and further growth. Our geographic footprint is well balanced, and we will continue to optimize it through targeted capital expenditure.
It provides a clear picture of how efficiently we are using capital to generate profitable growth and create long term value for our company's owners as promised at our capital market day back in 'twenty. One we entered our target range for return on capital employed back in 'twenty three.
Speaker #1: In addition , we will harvest selectively , invest selectively in value creating acquisitions all decisions will be investment based on our well and clearly known defined strategic imperatives and on prudent decision making .
Since then we have maintained within the upper half of that range. We are committed to maintaining a rosy between 15 and 20%, even though we will face temporary headwinds for this metric from our recent software acquisitions.
Roland Busch: They are both leading in their markets, and I cannot imagine anything that could hold them back from being successful, even more than they have been so far. Too early to jump to conclusions, but it's not a surprise that there's a lot of volatility at the moment out there, as I said, since there's room, and, of course, also reason for further clarification and details. Your first question, maybe one of them that needs further details. I hope we didn't get across like there's regulatory problems or challenges. It's just respect for regulatory processes. I think everyone is well advised when you do something for the first time that you respectfully look at those who have a say in the process. Therefore, I would rather consider that being a topic of timelines than content, but too early to assess that.
Speaker #1: And certainly, we will continue to monitor each M&A transaction closely based on specific criteria. Our aim is to ensure attractive returns and ultimately strong value generation.
I mentioned earlier.
Now we have been balancing very attractive shareholder returns with focused investments and we will continue to strike this balance effectively.
Speaker #1: Ladies and gentlemen, our markets are changing at a high pace, and Siemens is transforming rapidly to stay in the lead. Yet our principles for value creation remain the same and are fully intact.
We are very confident in the trajectory of the new fabric for Siemens is one tech company and we want our shareholders to benefit from reliable and sustainable returns.
We reiterate our commitment to an attractive shareholder return and a progressive dividend policy, we will stick to this policy even after the consolidating Siemens health in years.
Speaker #1: You can rely on stringent capital allocation and strong cash generation to drive operational performance at Siemens , you can rely on Siemens continuing to deliver very attractive and shareholder returns along the sustainable way we will ensure that , and rigorous execution and , transparency compliance remain paramount .
To maintain our trajectory and if necessary, we will temporarily allow a higher payout ratio. In addition share buybacks will remain a core pillar of shareholder return for Siemens investors and of course on top the intended spin off of 30% of Siemens health and your shares will benefit our shareholders.
Roland Busch: It's in their field and respectfully wait for them. If and when regulatory processes are getting us a clarification fast, we will be fast. If it takes a while, we will have to wait. We will then be very well prepared for the next steps to be taken. Next question from Ben Yuglo. I think Michael wanted to add something. Sorry. I choose the word problem. I'm sorry. I choose the word problem because maybe on the tech side, you may have problems. Yeah, as I said, I mean, we are standing on very firm grounds with our view on matters, but still, there is a regulatory aspect in it that needs to be considered, and we respectfully address that. We are talking to the regulators that are relevant for these steps.
Speaker #1: and I Roland , the managing board and the entire team , Siemens , are all fully committed further to accelerating value creation as one tech company , Siemens , thank you .
Directly and materially.
Roland outlined is significant significant growth opportunities that we see in our markets you will hear more about them in our deep dive sessions. This afternoon <unk>.
Average these opportunities we will continue to invest.
We will maintain high R&D intensity to continue driving our technological leadership and further growth.
Speaker #4: Thank you Ralph . Thank you , opening the Roland , for day . Welcome everyone . Also from my side , I'm Chris Ribeiro , the chief communications officer of Siemens , and I'm here with Tobias , the head of investor relations .
Our geographic footprint is well balanced and people continue to optimize it through targeted capital expenditure.
Speaker #4: And together, we will guide you through the day.
In addition, we will harvest collectively invest selectively in value creating acquisitions.
Speaker #5: Thank you Chris . Also , good morning . From my side , I'm really happy to see so many of you taking place here in person , but also a warm welcome to the joining ones us live via the webcast .
All investment decisions will be based on a well known and clearly defined strategic imperatives and on prudent decision, making and certainly we will continue to monitor each M&A transaction closely based on specific criteria. Our aim is to ensure attractive returns and.
Roland Busch: We feel encouraged by all the means and initiatives we took before that, that we are on the right path. That does not take away the decision power from the regulatory framework. Therefore, we are confident that there are no problems, but there are timelines and opinion-making required on the regulatory side. If we were not convinced of our view, we would never dare to show up with a proposal. Now it's Ben's time. Next question from Alexander Reuters. Ben Yuglo was on. Yeah. Oh, it's fine. Chris, take Ben first. Ben. Yeah, just push. Switch the microphone. There we go. I guess it's related to the previous question, but we're all frankly in the dark about exactly what the tax situation is and the regulatory implication.
Speaker #4: We have a packed agenda. You received the agenda before, and you can see on the screen we have deep dives with our experts.
Speaker #4: We have on hands experiences that showcase on corner networking exchange with MBM and experts . And what is next ?
Ultimately strong value generation.
Speaker #5: Obvious next is a break. I think we deserve all of it. We will be back in ten minutes for the Q&A with Roland.
Ladies and gentlemen, our markets are changing at a high pace and Siemens is transforming rapidly to stay in the lead.
Speaker #4: See you then . Bye
Yet our principles for value creation remain the same and remain fully intact.
You can't rely on stringent capital allocation and strong cash generation to drive operational performance at Siemens you can't rely on Siemens continuing to deliver very attractive and sustainable shareholder returns.
And along the way, we will ensure that rigorous execution transparency and compliance remain paramount.
Roland and I'm, the managing board and the entire team Siemens are all fully committed.
Roland Busch: I know, I understand these are probably sensitive conversations, etc., but Ralf, can you give us just a little bit more sense on what the tax obligations or considerations are? The reason why I ask is, from a Siemens AG standpoint, our understanding was that had basically gone away. What we're really talking about is from a receiving shareholder standpoint, what their withholding tax or commitment is going to be. Is that right? The second question is far more fun. A year ago, I think it was, when we had the Handelsblatt article and various comments about this conversation. At that point, I think that there was a how core is Siemens Healthineers to Siemens? We were going to do an internal review, look at the synergies, and all these kinds of things. There was obviously debate within the company.
To further accelerating value creation S. One check company Siemens.
Thank you.
[noise] well come back for the Q&A with Roland and Ralf.
Let me start with a few housekeeping items if.
If you have a question please raise your hand.
To ensure we can hear you is clear.
To ensure that we hear you clearly we ask that he used to microphone placed on the table in front of you. Please turn it on when asking your question.
To give as many people as possible the opportunity to participate please limit yourself to two questions.
Chris and I will moderate and take questions from both journalists and analysts.
We would start with the first questions from the analysts.
First question James Moore first row.
Roland Busch: It now looks as though a decision has been made. What allowed you to come to a firm, final decision? What changed in the water? What put you over the edge, so to speak, that allowed you to do this? Okay, let me start with the tax one first. I mean, there are, of course, tax implications in many different areas. For Siemens AG as a company and its tax obligations, I think we are fine. There is an immaterial amount compared to the potential deconsolidation gain involved. We did not want to bother you with that. It would be too early to quantify anyhow. Not on the Siemens AG side. Therefore, it is difficult for us to talk about withholding tax because we are not the addressee of withholding tax, and it is the depot holding banks for shareholders.
Thank you chip is its James Moore from Rothschild and good morning. Thanks for all the information in the news and the great growth outlook.
I guess my questions about profitability in particular D. I, if we're going to do high single digit growth at the group level I know you talked about the ambition of earnings above that but if we're high single digit growth for earnings Theres not a lot in there for margin expansion over time and normally record growth would drive some operational gearing and specifically in D. I.
I imagine you should have some tailored for fish benefits in productivity some of the benefits from severance and the positive economic equation.
Wondered if you could help us with what's on the negative side of the ledger apart from currency, which you've been clear on and in particular to the just the $2 billion of AI investment sorry, the ability of the Bay our investment whatever numbers does not have an impact on the P&L.
Roland Busch: That very much depends on the nationality or jurisdiction, residency of the individual being involved, of the magnitude of the investment being involved, of whether it's held privately or in a business environment. Therefore, we cannot jump to conclusions for the shareholder because there's not the shareholder. Therefore, withholding tax is, of course, the area we are talking. Since we are not owning the process, it's hard to comment. We are very confident that we thought about all the relevant aspects, but it's still not our turf to decide on. Therefore, we respectfully have to wait. Maybe this is also giving me a bit of an opportunity. I mean, the timelines are not written by ourselves, obviously. You have to respectfully wait for conclusions being made in that field.
So thank you James for giving me an opportunity to clarify a bit I know that some of you may consider in the guidance for Ti margin conservative.
I would rather qualified as prudent.
We clearly said and also experience that part of the market is not yet bouncing back reshape like two investment sentiment.
And therefore, we do expect on top of exchange rate and also on top of the extra audience for an integration that we mentioned and severance which will be pretty much 50% of what we guided for the entire company for fiscal 'twenty six on top of that we'll see quite a couple of challenges develop.
Roland Busch: There's also, of course, the question out from that, what I heard, where do we start from and where do we want to end up with? For those who are familiar with the financial and accounting language, a financial investment is considered to be below 20% typically. There are other aspects that need to be considered. If that's the midterm goal, you probably need to know where we start from. At the moment, we hold 67% in Siemens Healthineers. You also heard us talking about funding our software acquisitions, our latest software acquisitions, with the sell down of listed shares, both Siemens Energy and Siemens Healthineers. We didn't specify, but if you took for modeling an area of something around 60%, sell down to 60% from the 67% being a residual.
Ping through the first couple of months in the market.
We do see momentum there they are doing their homework, but also please bear in mind that severance being booked.
Not implicitly mean that all the impact is immediately popping up so that will take time to materialize.
And we want the company to stand on firm ground.
And also learn from history.
So therefore, I would call it prudent and conservative.
Yeah.
So let me talk about the.
In our investment so this is.
Basically.
It's an investment which goes across the company, but there's an incremental $100 million.
Took a million plus.
Which you will find in the innovation below ivs in that part. This is particular for the team which was its element fuel you will get to know emulators about to build up but this is only part of that other parts are as you know as <unk> talked about 1500. They are experts across the company we have many.
Roland Busch: From that, what we wanted to do in funding, maybe a bit below this is probably a meaningful area to think about. Starting point is 67, but there is intent and processes that have been ongoing to do what we said clearly last year when we announced that funding for the software acquisitions would be in part done by using the proceeds of selling listed shares. Thank you for that question. I give you really more details. What I'm saying now is not in the sequence of priorities, but it's basically describing the whole process, how we get to the decision. Let me first start. We always said we are not dogmatic about it. We also said that since the acquisition of Varian, we have a bottom line impact of 350 million, and we want to see how that materializes. By the way, it did.
Projects also in the businesses, but that is not increment. This is part of our R&D budget.
A question of analysis on the pain side.
And so Michelle Clinique.
Question from the press site enhance.
Okay great.
I have two questions. Please.
I Didnt raised man, but nevertheless.
You're in volunteer volunteered.
What communications do you have on the regulatory side for the deconsolidation of Smes and the second one the share price today is 5% down how do we interpret this week. Thank you.
Roland Busch: Obviously, we discussed all options, all possible options, because we need to be diligent in such a big decision so we do not oversee anything because this is a one-way street once you go there. We are working, for example, also on the point. The question is, how strong can we develop together the whole healthcare sector? It is not only in the headquarter to think about. It is really on the field. I mean, I started together with a team locally in the United States, also together with a consulting company to see, can we together create a stronger impact? We visited hospital customers to see there. By the way, the teams are working also on the ground together to see, can we really leverage each other's strengths?
Yeah. Thank you for your questions Michael.
Of course too early to finally conclude under share price development of today, but.
What I feel and also from the responses and that's what we get as feedback we may do drinking from a fire hose many different aspects leavers floating around and.
We are happy to have now an opportunity to clarify.
Areas that may not have been coming across completely clearly so that's why we have a Q&A.
I firmly believe that.
What we have to share today, we will have a very positive impact on the long term value development of both Siemens and Siemens Helton years, <unk> shares and also cross brewing opportunities from capital allocation and both companies. They are both leading in their market.
Roland Busch: I was saying in the basement where you find the scanners, and in the ground floor and uppers where we have the beds and all the other productivity, can we do something, including sustainability? Yes, we can. This is also good. It's roughly a EUR 1 billion business of ours, just one. Again, it is not that synergetic that you say that you can really drive much, much, much, much higher growth, but it's still good. We really took a deep dive in what does digitalization mean in our sectors, in the industrial sector, infrastructure, transport versus the healthcare sector. When I talk healthcare sector, and this is another element, increasingly clinic-driven healthcare sector. If you look at Siemens Healthineers' strategy, where they go, it's going more into therapies along with diagnostics, which is really the clinical part. You see all the regulations.
And I can only mention anything that could hold them back from being successful even more than they have been so far so too early to jump to conclusions.
It's not a surprise that there's a lot of volatility at the moment out there as I said since there's room and of course also a reason for further clarification and teachers, who first question may be one of them that needs further details.
I hope we didn't get across like this regulatory problems or challenges, it's just respect for regulatory processes.
And I think everyone is village wise when you do something for the first time that you respectfully look at those who have a say in the process.
Roland Busch: I mean, hospital systems, for example, they don't scale across regions. Digitalization is different from that perspective. We looked into what is our capital requirement in the future, what is that one of Healthineers. A very important aspect, which you have to take into consideration, is what are the fundamentals in the markets regarding growth, growth trajectory, where we can do a regional as well. Again, we are evaluating how synergetic are the businesses with each other. At the same time, and this is a very important point, our Siemens business really developed further in terms of growth, in terms of profitability, the way how much of obviously cash we are generating on our own. If we take that all together, you come to a point that once we go that step, we have a much, much stronger freedom regarding capital allocation on both ends.
And therefore, I would rather consider that being a topic of timelines than content, but too early to assess that it's in their fields and respectfully weighed for them.
Even when regulatory processes are getting us clarification fast we will be fast if it takes a while we will have to wait.
And we will then be very well prepared for the next steps to be taken.
Next question from Ben ULA.
Think Michael wanted to add something.
I'm, sorry, I chose the word problem because maybe on the tech side you may have problems.
Is it I mean, if we are where we are spending on very firm ground with our view on metals, but still there is a regulatory aspect and it's that needs to be considered and we respectfully.
Roland Busch: We could not justify a synergetic case, which is as big as in order to really keep going and really leverage. That finally, we thought we are better off in making that step. If I may add one thing just quickly, I mean, if you look back, that's why we took the time to remind ourselves where we are coming from central and took over. I think it's fair to say that the company has been already changing its fabric massively. It's not finger-pointing to the past or complaining about missed opportunities. It's about just keeping the momentum of that what we have been embarking on. We are a company that is scaling on digitalization, electrification, automation, and sustainability, with a focus on AI that is scaling globally. The healthcare industries are globally fragmented. They are ruled and regulated in different jurisdictions.
Dress that we are talking to the regulators that are relevant for these steps.
We feel encouraged by all the means and initiatives we took before that we on the right path, but that doesn't take away the decision power from the regulatory framework. So therefore, we are confident that there's no problems, but as timelines and opinion.
King required on the regulatory side, if we were not convinced of a view, we would never tend to show up with a proposal.
And I would spend time.
Next question from Alexander writers.
Nuclear was on.
Chris.
Take pinterest.
Ben.
Just two.
Yeah.
So it's a Muslim.
Roland Busch: If and when they scale, it's a different ballgame. The second thing is the entire sector. Don't get me wrong, Healthineers is a fantastic business, and they are clear market leaders in most of their areas anyhow, technology-wise, growth-wise, and from a profit-generating perspective. The entire sector will most likely not grow double-digit anytime soon. We can, and prove that we can do that already by now in some areas. Therefore, capital allocation needs to be focused into those relevant growth areas and why harming others with our opportunities. That's a big, big difference compared to the status we had when we listed Siemens Healthineers in March 2018. That was a different shape of Siemens AG.
I guess is related to the previous question, but we're all frankly in the dark about exactly what the tax situation is in the regulatory implications and I know I understand these are probably sensitive conversations etcetera, but Ralph can you give us just a little bit more sense of what the.
Obligations or considerations ours and the reason why I ask is from a Siemens AG standpoint, our understanding was that basically gone away and what we're really talking about is from a receiving shareholder standpoint, what the.
Withholding tax or commitment is going to be so is that right and then the second versus for a more fun.
A year ago I think it was when we had the Handelsblatt article in various.
Comments about this conversation.
That point I think there was a.
Roland Busch: Therefore, it's only consistent that you time and again review your portfolio, your perspectives, your capital allocations, and then conclude at the right point in time to do the right thing, and then consistently and as quickly as possible. The next question for Alexander from Reuters. Thank you very much. I want to follow up on this a little bit regarding your targets for the next few years. When you take out the Siemens Healthineers' projected or past growth rates, the 6% to 9% don't seem too ambitious. I think that's what the market also thinks today. This is not really excluding Siemens Healthineers. This is not very much more than in the last few years. Can you comment on that? How ambitious would you say is your target?
How cool is Siemens Health News T. Siemens we were going to do an internal review look at the synergies movies going to phase and there was obviously a debate within the company. It now looks as though a decision has been made what allowed you to come to a final decision what changed in.
The water what put you over the edge so to speak that allowed you to do this okay. Let me start with the tax one first.
There's of course tax implications in many different areas for Siemens AG as a company and its tax obligations I think we're fine there's an immaterial amount compared to the potential deconsolidation gain involved we didnt want up although we would that would be too early to quantify anyhow. So note on the Siemens.
A G side.
Therefore, it's difficult for us to talk about withholding tax because we are not the atrophy of withholding tax yeah, it's and it's the deep pool holding banks for shareholders and that very much depends on the nationality or jurisdiction residency of the individuals.
Roland Busch: On the other hand, Siemens Healthineers has had quite a big chunk of your sales and profits in the last few years. How do you think Siemens, or do you think Siemens can compensate this within the next few years? Will there be a Siemens in the end that may prove to be too small and become a takeover target? Thank you. Let me start at the end. I don't think so. We are still a sizeable company, and this does not cause sleepless nights. Let me start with your, I tend to disagree that the 6% to 9% growth rate going forward is a weak target. I would consider it to be a very strong number, one. Think where we're coming from. I talked about it in the last sequence. We had 5% to 7% ago, and now from 6% to 9%, number one.
Being involved of the magnitude of the investment being involved of whether it's held privately you're in a business environment. So therefore, we cannot jump to conclusions for the shareholder because there's not the shareholders.
Therefore withholding tax is of course the area, we are talking and since we are not owning the process, it's hard to comment.
But we are very confident that we thought about all the relevant aspects, but it's still not our turf to decide on so therefore, we respectfully have to wait.
Maybe this is also giving me a bit of an oven opportunity.
I mean, the timelines are not written by ourselves obviously.
You'll have to respectfully wait for conclusions are being made in that field.
But there's also of course the question out from that what I heard.
Where do we start from and where do we want to end up with for those who are familiar with the financial and accounting language a financial investment.
Roland Busch: Number two, did it double-check for the GDP growth in whatever the world, how that goes? Even our markets are on the high side. I talked about our markets growing 6%. They grow only by 6% because we have a substantial part of high, fast-growing digital business in there. Remember the 175 by 2030? This grows by 11%. How many companies can claim to play in such a fast-growing market substantially in revenue? Talk about 9.4 billion revenue. All in all, if you agree that if you come to that conclusion, then talk about the industrial, the investment, it's hold back still. China, by the way, is gradually picking up. This is not a V recovery in the market. It's gradually picking up. We are picking up momentum with that market too.
Is considered to be below 20% typically there's other aspects that need to be considered if that's the midterm goal.
You probably need to know where we start from the moment, we hold 67% in Siemens Health news.
You also heard us talking about funding our software acquisitions, our latest software acquisitions with the sell down of listed shares both Siemens energy and Siemens health in years, So we didn't specify.
But if you took for modeling and area of something around 60% sell down to 60% from the 67 being a residual from that what we wanted to do in funding may be a bit below this is probably a meaningful area to think about so starting point.
Roland Busch: I tend to disagree that a midterm growth of 6.9% picking up momentum is, we believe, a very strong target. We have to see what others can do in that space. I believe this is really good. On top, of course, converting top line into results is not a bad thing either. We clearly committed to outgrowing EPS. The top line growth, which is quite something to accomplish time and again. One more thing since you mentioned it. For some businesses, we could grow faster. We are throttling, for example, in more dilutive solution business. That's why we say we could go faster, but we keep that on a certain level. That's another element where we really believe that happens, for example, in pieces of our building business and pieces of our DI business as well.
Is 67, but there is intense and processes that have been ongoing to do what we said clearly last year, when we announced that funding for the software acquisitions would be in part be done by using the proceeds of selling listed shares.
So and thank you for that question and I'll give you a really more details what I'm, saying, though is not in the sequence of priorities, but it's basically describing the whole the whole process, how we get to the decision. Let me first start you always said we are not automatic about it and you also said that.
Since the acquisition of Varian, we have a bottom line impact of $250 million and we want to see how that materializes. It by the way it did so.
So then obviously, we discussed all options all possible options, because we need to be diligent in such a big decision. So we don't oversee anything because this is a one way street when you once you go there.
Roland Busch: The other part of your question, Alexander, was around closing a potential gap being left behind. Siemens Healthineers once being deconsolidated. I don't want to get into accounting things here, but it's a big difference between fully consolidating, amongst others, profit and cash flow and owning the proceeds. Because we do own already by now the dividend, we consolidate the free cash flow. It's a big, big difference whether you own something or whether you have something in your area of responsibility from an accounting perspective and an oversight perspective. Don't misinterpret that big difference that is there already. Now, if and when, as we did, we sell down, we came to 67%. That gap already has been widening compared to the 85% we originally owned. Did you see any negative development in the KPIs of Siemens consolidated or not? I didn't see that.
So we're working for example also on the.
A point of the question is how strong can be developed together the whole health care sector and it's not only in the.
Headquarter to think about it is really on the field started together was with the team locally in the United States also together with a consulting company to see can be together create a stronger impact visited hospital customers and to see there and by the way. The teams are working also on the ground together to see can we really leverage off each other strengths.
We're seeing in the basement, where you find the scanners and the and the ground floor and others, where we have the beds and all the other productivity and can we do something including sustainability and yes. We can and this is also a good its a roughly a 1 billion business of ours, just one but again it was not not not that synergetic that you say that you can read.
Drives much much much much higher growth, but it's still good they need to be.
We took a deep dive in what does digitalization mean in our sectors and industrial sector infrastructure transport.
Roland Busch: Therefore, we are confident that we can continue on that trajectory and do meaningful things in a well-balanced way between investing and shareholder returns. The second thing is we made a clear commitment, and I had that in my presentation and speech, that we will continue committing ourselves to progressive dividend. That means we are, if need be, also ready to increase for an interim period the payout ratio. That statement is based on a very deliberate approach and well-thought-through planning. We are highly confident that we can close that gap if it occurs over a meaningful period of time. As I said before, we are not owning the timelines of deconsolidation. Therefore, we do not want to speculate about that.
As the health care sector, and I talk health care sector.
There's another element increasingly.
Our clinic driven Oscar sector. If you look at Siemens House in a strategy, where they go it's going more into therapies.
Along with diagnostics, which is really the clinical part you see all the regulations in hospital systems. For example, they don't scale cross regions digitalization is different from their perspective.
And then we looked into what is our capital requirement in the future. What does that 1000 is a very important aspect, which you have to take into consideration what are the fundamentals in the markets.
Regarding gross growth trajectory and where we can do original as well.
And again reevaluate Inc. How synergetic is.
The business with each other at the same time and this is a very important point seem or Siemens business really developed further in terms of growth in terms of profitability. So we view.
Roland Busch: If and when it comes to that point that the spin is executed and deconsolidation is taking place, we also will have the benefit of a deconsolidation gain most likely. We cannot speculate about that today because it's driven by many different factors, amongst one is very important. That's the share price at that point in time. You can rest assured, as much as the consolidation gain is higher than tax burden by far, it also may exceed a gap in a given year if and when that deconsolidation is taking place from an operating perspective. I cannot give you more confidence of the managing board that we are fully aware of that question. Next question from Phil Ballard. Yeah. Hi. Thank you. The first question is a follow-up on the Healthineers comments that you've made.
The way how much obviously cash we're generating on our own. So if you take that altogether you come to a point that once we go then step we have a much much.
Stronger freedom regarding capital allocation on both ends.
We could not justify a synergetic case, which is as big as in order to really keep going and really leverage.
And in that final did finally solved with we are better off in making that step.
And if I may add one thing just just just quickly I mean, if you look back that's why we took the time to remind ourselves where we are coming from central and took over I think it's fair to say that the company has been already changing its fabric massively.
Roland Busch: Is it possible that you could potentially deconsolidate pre the spin via dribble-outs and blocks? They've been taking place in recent months anyway. Could they potentially still be accelerated prior to the spin-out? That's question one. Secondly, in terms of M&A, it sounds as though potentially large things are going to happen. What is missing when you talk about the fabric? What's missing from the fabric today that you think is important going forward? When would we anticipate deals? Thanks. Let me take the first part of your question, Phil. I don't want to speculate about the timelines and things, but it's highly unlikely that a deconsolidation would take place before the spin of the 30%. You never say never, but it's highly unlikely. As I said before, we are busily looking into the regulatory framework and opportunities arising from that.
And it's not finger pointing to the past.
Complaining about missed opportunities it's about just keeping the momentum of net what we have been embarking on.
Company that is scaling on digitalization electrification automation sustainability with a focus on AI that is scaling globally.
Health care industries globally fragmented they are rude and regulated in different jurisdictions, so if and when they scale, it's a different ballgame.
Second thing is the entire sector and don't get me wrong health and uses a fantastic business and there are clear market leaders in most of their areas anyhow So technology.
Wise and also growth wise and from a permit from from a profit generating perspective, but the entire sector will most likely not grow double digits anytime soon.
Roland Busch: The entire process, of course, will not be done within a couple of weeks. We are also mindfully looking at the share price of Healthineers, of course. Therefore, we are not in a hurry of doing anything premature and harming the value of that really outstanding company. There's not really a big piece missing currently. I can tell you in which areas we're looking. Number one is, and that's quite obvious, we're looking to any kind of software assets in the market. Take, for example, our market expansion, which we did with Dotmatics. It opened us a new space in the R&D of pharmaceuticals, so simulating molecules, getting the twins there. There's a space which is super dynamic, super interesting. Any kind of asset which enriches our portfolio there is super interesting.
We can improve that we can do that already by now in some areas and therefore capital allocation needs to be focused into those relevant growth areas.
And why harming others with our opportunities.
That's a big big difference compared to the state as we had when we listed.
Siemens Celsius and March 2018.
That was a different shape of Siemens AG. Therefore, it's only consistent that you time and again review your portfolio. Your perspectives your capital allocations and then conclude at the right point in time to do the right thing and then consistently and as quickly as possible.
Okay.
The next question from Alexander <unk> from Reuters.
Yeah.
Thank you very much.
I want to follow up on this a little bit.
Roland Busch: We also talk about connected hardware devices, which are generating data on the shop floor. Any kind of device, we have a chance to increase. You're looking into that one. I mean, you know that the new AI factories require new technologies, solid-state transformers, DC switching. We have, in all cases, what I'm talking about, organic investment as well. There might be inorganic moves, smaller ones, maybe larger ones. We have the firepower to do that, but it has to make, obviously, economic sense and align with our strategic priorities. Therefore, in the AI space in particular, we are watching closely also the startup of smaller companies. I mean, in some cases, they are just, I mean, their market expectations or their value is so high that it's prohibitive. Still, in an early space, you find a lot of interesting companies, which is interesting.
Regarding your targets for the next for the next few years when you take out the Siemens Health Denise.
Projected or Pos growth rates in the 6% to 9%.
Don't seem too ambitious and.
I think that's what the market also.
Things today.
So this is not really excluding women's health needs. This is not very much more than.
In the last few years can you comment on that how ambitious would you say is your target.
And on the other hand.
Women's Health News has has had quite.
Quite a big chunk of your.
Of your sales and profits in the last few years, how do you think Siemens or do you think Siemens can compensate this within the next.
Next few years.
Roland Busch: It's interesting from two perspectives. What's the offering, and what is the talent which comes along with that? Typically, we would stick to our trajectory, which we had in the past. We are adding incremental medium-smaller-sized assets to our software portfolio. We're looking into hardware, but we also do larger moves, as you know, like Altair and Dotmatics, if it really fits to our portfolio. Any questions from the media side, please? Hello. Filippo Santelli from La Repubblica, an Italian newspaper. I have two questions. The first one is on your slightly optimistic outlook for the geopolitical scenario. We've seen the US and China go through phases of escalation. The escalation, it looks like we're in the escalation phase right now. Most experts think that in the medium-long term, the two countries are headed towards a technological decoupling.
Or will there be a siemens in the end that's.
That may prove to be too small and.
Become a takeover target. Thank you.
Let me start at the end.
I don't think so.
We are still a size of the company.
This is this does not cause sleepless nights, so, but let me start with your I tend to disagree then six Michaels and growth rate going forward as is.
It's a week target over.
I would consider it to be very strong no more I think will be coming from and I talked about it in the last Ah sequence. We had five to seven to go from six to nine number one number two did it double check for the GDP growth.
But around the world how that goes.
Given our markets are on the high side I talked about <unk> growing 6%. They don't grow only by 6% because we have a substantial part of high fast growing digital business in there.
Roland Busch: What makes you confident that Siemens will stay in a position where it can provide key technological capabilities both to US and China in strategic sectors, thinking about semiconductors, aerospace, energy, or whatever? The second one is on Europe and its industrial and technological competitiveness. It's obviously very high on the agenda. Do you think in concrete terms Europe and European countries are taking the right actions to boost industrial competitiveness, both on the regulatory side and on the investment side? Thank you. You trigger something here. I said you trigger something. Talk about the markets. Number one, the markets themselves, and I said it before, number one is we are sitting on, we are serving growth markets, secular growth markets.
Remember the 175 by 2030 this grows by 11% how many companies can claim to play in such a fast growing market substantially even revenue talking about 9.9 dollars 4 billion revenue so.
All in all if you if you if you agree that if you come to that conclusion, then the turbo the industrial the investment it's hold back still in China by the way is gradually picking up this is not a V recovery in the market is gradually picking up so we are picking up momentum with that market too.
So.
I tend to disagree that.
Ah grows our midterm growth of six 9% picking up momentum is.
We believe a very strong target and.
And we.
We have to have to see what.
Roland Busch: There's not a really one-to-one match between the GDP growth and the market growth because, as I said before, we are focusing on the higher growth areas, automation, digitalization, sustainability, and AI. If it comes to technologies, I would say it's getting harder that you have a technology in a certain space, in a certain space, which is scaled globally. This is the reason why we are more and more going for local development and not only applications based on a global platform, but genuine local development. Take an example of China. The products which we talked about, the new ones, they have all the way local Chinese components down to the silicon. This is not the high-end 5, 3 nanometers silicon. You find a lot of that, by the way, is produced in China. The older nodes, the market share coming from China is extremely high.
What others can do in that space, but I believe this is really good.
And on top of course, converting topline into results is not a bad thing either and we clearly committed to outgrow in EP is the top line growth which is.
Quite something to accomplish time and again and just one more thing since you mentioned it we are for some businesses. We could grow faster. We are struggling for example in more dilutive solution business. That's why we say we could go faster, but we keep that on a certain level. That's another element, where we really believe that happens for example in pieces or bill.
Business in pieces over the other businesses.
Yeah.
The other part of your question Alexander was around closing a potential gap being left behind Siemens health in years once being consolidated.
I don't want to get into accounting things here, but it's a big difference between fully consolidating amongst others profit and cash flow and owning the proceeds.
Roland Busch: We do that also because we know there are regulations coming in which are forcing you to use also only China silicon on your controls. We do that. We are prepared to do that. We go here all in. At the same time, we do that on the other side. If we talk about innovation, software-defined automation for global market in the United States, this is more based on resources, but also on components coming from there. There's one area, obviously, which is more critical, which is software, because software you want to develop once and sell it as much as you can globally. The only restrictions which we see so far, and you could read it also in newspapers, is EDA software. Therein, it's not the whole EDA package.
Because we do own already by now the dividend.
Consolidate the free cash flow, it's a big big difference, whether you own something or whether you have something in your area of responsibility from an accounting perspective, and an oversight perspective.
MS interpret that big difference that is there already yeah.
So now if and when.
As we did we sell down.
Roland Busch: It's the package which is geared for the smaller nodes, so 5, 3 nanometers, which there's a restriction. It was resolved quickly after, and this is the arm wrestling. This is technology on the one side, and rare earth material on the other side. It was resolved after three weeks. Would that go away? I don't know. This is the point where you also start thinking of, can we, let's say, fork some of the software platforms as well? If need to, we would. Currently, the majority of that, what we are doing there, we believe we can still serve in different areas. You're right. The focus is definitely the semiconductors and, to some extent, dual use, the sole aerospace and defense sector. Well, we need the answer to be competitive in the future, also to have our industry staying competitive in the future.
Come came to 67% that gap already has been widening compared to the 85%. We originally owned did you see any negative development in the Kpis of Siemens consolidated or not I didn't see that so therefore, we are confident.
That we can continue on that trajectory in two meaningful things in a well balanced way between investing and shareholder returns.
The second thing is.
We made a clear commitment and I had that in my presentation in speech that we will continue committing ourselves to progressive dividend.
That means we are if need be also ready to increase for an interim periods the payout ratio.
That is the statement is based on a very deliberate approach and well thought through planning we are highly confident.
Roland Busch: The answer is speed and agility in innovation. Germany, in particular, we do not have resources. Our resources are the people. Our resources are innovation, innovation which is so good that others want to buy it. We are an export country. Innovation based on ecosystems, super strong companies, and still automotive. I count on them, also the supply chain. They need to do actually also what we do, digitalizing all their processes, work more with digital twins, and more work with data. Along with data comes, of course, the whole cybersecurity. Go all in with AI. I mean, I strongly believe and subscribe to what Jensen said. This is a general-purpose technology. There's a world before electricity and after. It was a general-purpose technology. Think about it. There's a world before and after AI. The world will use it.
That we can close that gap if it occurs.
We're meaningfully period of time as I said before we are not owning the timelines of deconsolidation. Therefore, we don't want to speculate about that but if and when it comes to that point that the spin is executed and deconsolidation is taking place.
We also will have the benefit of the deconsolidation gain most likely we cannot speculate about that today, because it's driven by many different factors amongst one is very important that the share price at that point in time, but you can rest assure as much as the consolidation gain is higher than textbook by far it.
Also may exceed a gap in a given year, if and when that deconsolidation is taking place from an operating perspective.
Roland Busch: If you look at the regulations which we have currently in Europe, AI Act, Data Act, Cybersecurity Act, this is contradicting. It's too much. It's throttling innovation. Why would you derive a regulation which is supposed to protect end consumers? Why would you deploy the same mechanism to B2P business? We are writing contracts, we are taking care about our products. Is there a need for regulation? Don't get me wrong, but this should be guardrails which ensure that within these guardrails, you can go all in with your innovation speed. This is not only about regulations, but also about decision-making. We are in a time where we need more and faster free trade agreements. We cannot wait for 10 years when China is doing that in one or two. We need less bureaucracy.
I cannot give you more confidence of the managing board that we are fully aware of that question.
Yeah.
The next question from Phil brother.
Yeah, all right. Thank you and the first question is a follow up on the health in his comments that you've made is it possible that you could potentially deconsolidation pre spin triple outs and blocks. They they've been taking place in recent months anyway or could they potentially still be accelerated prior to the spin out.
Last one and then secondly in terms of M&A at.
It sounds as though potentially large things are going to happen what more is missing when you talk about the fabric what's missing from the fabric. Today that you think is important going forward and when would we anticipate deals. Thanks.
Let me take the first part of your question Phil.
Roland Busch: We need faster digitalization also of these processes. Just pick one example. If you want to attract talents, you better get your visa process right, that you get these guys and they do not have to wait for six months. Otherwise, they are somewhere else. It can go on and on. I believe we have really a substantial way to really sort out complexity and innovation, throttling governance, and regulations in Europe and Germany in order not to lose competitiveness on a global scale. I tell you, neither China nor the United States is waiting for us. Next question comes from Daniela. Thank you very much. I have two questions, both of them related to digital industries, but I will ask them one at a time. First, on software, Ralf, you have mentioned that the headwinds from the SaaS transition were mostly behind us.
I don't want to speculate about the timelines and things, but it's highly unlikely that a deconsolidation would take place before the spin off the 30%.
Never say never but it's highly unlikely and as I said before we are busily looking into the regulatory framework and opportunities arising from that.
So the entire process of course, we will not be done within a couple of weeks, but.
We're also mindful of really looking at the share price of health in years of course, and therefore, we are not in a hurry of doing anything premature and harming the value of that really outstanding company.
So there.
There's not really a big piece missing currently.
But I can tell you and which areas are looking number one.
Quite obviously, we're looking to any kind of software assets.
Roland Busch: Can you comment on sort of now the potential tailwinds on growth and margin based on what we've seen as headwinds? Can we start counting on those in 2026? I'll ask the other after. Want to ask two questions at the same time? You want me to ask now? I was going to wait. Okay. Okay. I mean, first of all, you're right. We are, I would say, 80% done with the SaaS transitioning, not completely, as we mentioned before. Of course, we are seeing positive impact from that. We still also have a business that has not been heavily affected from SaaS transition. Thanks God, EDA is working very well too. It still is and will remain a chunky business. The seasonality and the resilience that we aspire with the SaaS transition is not fully affecting the entire portfolio. We discuss that quite frequently.
Assets in the market take or for example, or market expansion, which we did was to genetics. It opened as a new space and the R&D of pharmaceutical so simulating molecules coding to transfer business space, which is super dynamic Super interesting, so any kind of answered which enriches our portfolio there is super.
Interesting.
We also delivered connected hardware devices, which are Germany data on the shop floor.
Any any kind of device. We are we have a chance to increase youre looking into that one.
You know that the new factories require new technologies as <unk> solid state Transformers DC switching we have in all cases, what I'm talking about organic investment as well, but there might be inorganic moves smaller ones.
Maybe larger ones, where we have the firepower to do that but it has to make obviously economic centric and aligned with our strategic priorities.
Roland Busch: We also have been acquiring two highly attractive companies that are on the path to be integrated. I indicated in my presentation that there will be 120 basis points, give or take, margin impact from integration efforts. There's people-related things, a bit of adjustment here and there. No one can expect this being done in three or four months, obviously. That is going to have an impact. There's also a clear opportunity to get into scaling mode on that one, and we feel highly encouraged by the results we achieved so far. We discussed the cloud-based ARR ratio being very close to 50%. The original plan was 40% by the end of 2025, so we are ahead. Roland has been elaborating on the customer-specific access we have with small and medium companies. The entire rationale of the SaaS transition is bearing fruit now and will be harvested.
So therefore.
Is AI space in particular, we are watching closely also the startup of the smaller companies.
In some cases they are just I mean there.
Market expectations or the value is so high that its prohibited but still in the early space you find a lot of interest in companies, which is interesting and it's interesting from two perspectives, what's the offering in and what is the challenge with which comes along with that but.
Typically we will stick to our.
Trajectory, which we had in the past so we are adding incremental medium and smaller sized assets to our software portfolio. We are looking into another but we are also to larger moves as you know like alternative genetics, if it really fits to our portfolio.
Yeah.
Any question on the media side.
Please.
Hello.
3%, telling from ladder public and Italian newspaper.
Roland Busch: I know that you, or at least some participants, would love to hear us talking about software margin already by now. We are not yet at that point, but you can rest assured that we aspire, continue aspiring, and are on a good trajectory to be one of the margin leaders in the years to come as well. There are a couple of specifics for those who are not that deep into the detail. Many of the software companies are listed, have shares to pay for, to pay with their key personnel. This will not be one by one translated into the Siemens approach. That is why I have been inviting many of you contributing to getting us to a point to having meaningful metrics once we start talking about them.
I have two questions. The first one is on your slightly optimistic outlook for the geopolitical scenario.
We've seen U S and China go through phases of escalation and Deescalation when it looks like we are in the escalation phase right now, but most experts think that in the medium long term. The two counties are headed towards a technological decoupling. What makes you confident in steaming will stay in a position where it can provide key technological.
<unk> capabilities, both to U S and China in strategic sectors thinking about semiconductors are aerospace or energy or whatever and the second one is on Europe, and its industrial and technological competitiveness.
It's obviously very high in the agenda.
Roland Busch: That metrics should not add another non-GAAP figure to the hundreds of non-GAAP figures floating around already in that field. I will still be happy to listen to every meaningful proposal in that field. We are committed to make this a success, as you know, and to also share relevant metrics at that point in time when we feel we are mature for it, and you can work with that then meaningfully. One last comment, if you allow, you can rest assured that Roland and myself are at least as ambitious as you guys are when it comes to profitability development at our software business. Thank you. The other part is regarding the automation part. You've commented some years ago on sort of the challenging competitive environment in China. You then adjusted your offer towards that.
But do you think in concrete terms Europe in European countries are taking the right actions to boost the industrial competitors, both on the regulatory side and on the investment side.
You trigger something here.
So.
I said you trigger something.
So talking about.
The market's number one that the markets themselves when and I've said it before number one is we are sitting on via serving growth markets secular growth market. So there's not really one to one match between the GDP growth in the market growth because as I said before we are focusing on the higher growth areas automation digitalization.
Sustainability and AI.
If it comes to technologies. It's it is I would say, it's getting harder that you that you have technology in certain space in certain space, which is K globally. This is the reason why we are more and more.
Roland Busch: Can you give us a little bit of a view right now? Have you started to see market share going back up? Should we foresee margins in China in automation could also go up? To the later one, yes, because the Chinese market is still under the potential which we have there and which we see there. This is a general remark regarding our automation business funds. Secondly, we see also a pickup not only in the we talk about the value for money market. This is where we launch our new products, but also in the other segments, higher segments. Market is picking up, in particular in the factory automation space. Machine building is still hold back a little bit, but there we are picking up momentum. We see traction in the market of our new products which we launched. There's a reason why.
For local for local development and not only applications based on our global dotcom, but genuine local development to give an example of China.
The products, which we talked about the new ones. They are they have all the way to local Chinese common components down to the silicon.
This is not the higher end five three nanometers silicon you find out find a lot of it by the way is produced in China. So the older nodes are the market share coming from China is extremely high. So we do that also because we know there are regulations coming in which which are forcing you to to use also only China silicon on your controls and.
We do that we are prepared to do that would go with you all and at the same time, we do that on the other side, if you're talking about innovation software defined automation for global market in United States. This is more based on resources, but also in components coming from there.
Roland Busch: As I said before, this is now an engine which we started. We are about to launch 20 new ones. For example, IOs are rebirthed, and they would even go global. This is a really super strong platform. Once we do that, it's new products and new products with a cost out, which allows us also to drive our margins at the same time. We are very careful about maintaining our margin. There's still, in the very high end, higher money to earn on that one. Don't underestimate, if you do it right from the specification to the sourcing, to the manufacturing, then you can also drive your margins in that business going forward. It is a volume game, though. Therefore, we have to get traction, and we have to sell more of those in the market.
What is what is one there's one area, obviously, which is which is a more critical with just software to go software going to their loved ones and sell it as much as you can globally.
The only restrictions, which we see so far and you could read it also newspapers as EDA software.
They're in it's not the whole EAA packages, the package, which is geared for the.
The smaller nodes, so five three nanometers, which there's a restriction it was resolved quickly after and this was the arm wrestling known business technology on the one side and.
Rare earth materials on the other side and it was resolved after three weeks.
Did go away I don't know, but this is the point, where you where you also start thinking off can be.
Roland Busch: The last point is that it's a different sales motion too. We are learning that. This value for money addresses different customers, some customers which we didn't talk to yet. We reached them also with our digital platform. We talked about super relevant, but you still also need to have some feed on the street. There's a reason why we're happy that we have more. We double our quota carrying people globally for the automation, in particular in China. Therefore, it's a combination of having the right products and also gearing our market, go-to-market for eventually new customer market segments. We are very confident that we are picking up momentum there. Question from the media comes from Angela Mayer. Thank you very much. Two very short questions. First, on your software business, could you maybe quantify the software margin, the margin of your software business?
Let's say for some of the software software platforms as well.
If need to we would currently.
Majority of that what we're doing there we believe we can still serve in different areas.
You're right to focus is definitely to semiconductors and to some extent tool use so aerospace and defense sector.
Sure.
Yeah.
We need the answer the answer to be competitive in the future also to have our industry staying competitive in the future. The answer is speed and agility and innovation.
Germany in particular, we do not have resources, our resources our people our resources, our innovation innovation, which is so good that others want to buy it so via export country.
Innovation based on ecosystem Super strong companies into automotive I count on them, but also the supply chain.
Roland Busch: I think there has been some speculation about it. Is it fair to assume that your software margin is dilutive to the digital industry's margin? Second question, just to clarify, your growth target of 6% to 9%, does this include any acquisitions? Thank you. Thank you for the question. I think I answered your first question already by commenting on what has been asked before. If we had the intent to share software margin at this point in time, we would have done it. I said also the reasoning for that. We are in the process of completing a very successful SaaS transitioning. We always said when we started to enter into the transition to SaaS that we will consider sharing metrics after completing the SaaS transition. Being not there, we stick to what we said.
But they need they need to do actually also what we do is digitalize Inc.
All the processes work more with digital twins and more work with data.
As long as data comes of course, the whole cyber security go all in with AI I mean.
I strongly believe and subscribe to dental a chance and said this is a channel purpose technology virtual world before electricity and after Basel channel purpose technology think about it and there's a vote before and after AI.
And the vote will use it and therefore, if we start and if you look at the regulations, which we are currently in Europe.
Data Act cybersecurity inked this is contradicting its too much.
Bottling innovation why would you do run is a regulation, which is supposed to protect and consumers why would you deploy the same mechanism to PDP business. We are writing contracts, we are taking care about about our products.
Roland Busch: The second part of that question was implicitly answered with that as well, because if we talked about the margin levels and the impact on the DI margin at all, we would do exactly that, what we do not do at the moment, share something premature. I think there's nothing to add. Regarding our midterm growth target, 6% to 9%, this is without Siemens Healthineers? Is it without M&A? I see hands in the second row. John. Thank you. It's Jonathan Mountsey from BNP Paribas. First question, obviously, you've committed today to take Healthineers down to financial asset status, which you also then elaborated as 20% or less. When you exited energy, I think you already at the beginning made the commitment to a full exit. Why not today make that commitment for Siemens Healthineers?
As a need for regulation don't get me wrong, but this should be guardrails, which ensure that within these guardrails you can go all industry innovation speed.
So therefore this is not only about regulations, but also about decision, making we are in a time, where we need more and faster free trade agreements and we cannot wait for 10 years, when China is doing that in one or two we need less bureaucracy. They need faster digitalization also of these processes just pick one X.
Example, if you want to attract talents you better get your visa process right.
Get these guys and they don't have to wait for six months, otherwise there or somebody else. So he can go in on I believe we have really a substantial wait too.
Really saw.
Salt out complexity, and thwart innovation throttling governance and regulations in Europe and Germany.
Roland Busch: The second question, just thinking out, I would suggest that the day after you deconsolidate Healthineers, you're going to start getting questions about the rest of the portfolio. Mobility is doing very well, we know that. Healthineers is a good business, energy is a good business, you exited those. Can you give the sort of synergistic reasons why mobility maybe fits within the portfolio? Let me take the first part of your question, John. I think it's important. First of all, I do not think that we should and can compare the energy listing and exiting to the Healthineers listing and exiting, it was completely different. I don't want to repeat all that, what you know anyhow. Therefore, taking a relevant step at the right point in time, I believe, is a good thing to do.
Not to lose competitiveness on a global scale and I'll tell Ya, neither China, nor United States waiting for us.
Next question comes from Anita.
Thank you very much I have two questions and both of them related to digital industries, but I'll ask them. One at a time first time software Ralph you've mentioned that the headwinds from the SaaS transition, where mostly behind us and can you comment on sort of now the potential table leans on growth and margin based.
What we've seen has had wins in and can we start counting on those in 2026 and I'll ask the other assets.
When asked to question at the same time, you want me to ask now I was going to but I can't get it.
Roland Busch: At the moment, we are busily preparing for those crucial steps that it will take to get that spin done. Being a financial investor, in the meaning of the word, means being a financial investor then. A financial investor, as also many of your clients are, would take prudent decisions then on whether to hold or not an asset at a certain point in time. We are not at that point yet. Therefore, we do not want to jump to premature conclusions. Maybe you consider that playing with words as the relevant piece, financial assets are financial assets. Mobility is a completely different situation. Let me start with the technology. Currently, I think it is fair to say that Siemens Mobility is playing the technological leadership, regardless whether you talk trains, the efficiency of our trains, talk about our recent win at SBB.
Yeah.
I mean first of all you're right.
We are I would say, 80% done with the SaaS transitioning not completely as we mentioned before.
And of course, we are seeing.
C.
Positive impact from that.
We still also have a business that has not been heavily affected from sales transition. Thanks got EPA is working very well to it still is and will remain a chunky business. So the seasonality and the resilience that we aspire with the SaaS transition is not fully affecting the entire portfolio, we discussed it quite frequently.
We also have been.
Wiring to highly attractive companies that are on the path to be integrated I indicated in my presentation that will be 120 basis points give or take margin impact from integration efforts is people related things theres a bit of adjustment here and there. So no. One can expect this being done in three or four months, obviously them. So that's good.
To have an impact.
There is also a clear opportunity to get into scaling mode on that one and we feel highly encouraged by the results. We achieved so far we discussed our cloud based air our ratio be.
Roland Busch: It was not won by the price. It was won definitely by the technology. What do we do? Efficiency, maintenance cost, service cost, predictive maintenance, all that sits on solid Siemens technologies. The signal in the cloud was development not possible without the technology which we talk about in our technology fabric, cybersecurity, the cloud, machine learning core, which drives the predictive maintenance of our trains. We are saving one train of our opera or two trains in some cases in the fleet because we have an uptime. All that is based on the products which we do together with technology which was scaling across the company. Mobility in particular loses it, including also controls, for example. It goes further. We are genuinely working on a genuine new product development.
Very close to 50% original plan was 40% by the end of 'twenty. Five. So we are ahead Roland has been elaborating on the customer specific access we have with small and medium companies.
So the entire rationale of the SaaS transition is is bearing fruit now and will be harvested I know that you are at least some participants would love to hear us talking about software margin already by now we are not yet at that point, but you can rest assure that we aspire and continue aspiring.
And are on a good trajectory to be one of the margin leaders in the years to come as well.
Roland Busch: If you get a tender that AI gives you an idea how the train looks like, which you should offer based on all the manufactured trains we did in the past, AI can learn it and train it. This is a next level, and this is technology which we bring to the party and make out of Siemens Mobility technology that what it is today, which is a clear margin leading. Wait for our new Novo trains once they hit the market, how they look like. I go along that supply chain management. I mean, it's commodities. It's steel, green steel, aluminum, green aluminum. This is a super leverage what we do there to make, and the customers are asking for that. We need to also offer that without having a super impact on our cost. The same holds true for hardware and the like.
A couple of specifics for those which are not that deep into the detail. Many of the software companies are listed have shares to pay for to pay with their key personnel. This will not be one by one translated into the Siemens approach that Brian that's what I have been inviting many of you contributing to getting us.
To a point to having meaningful metrics once we start talking about them.
And that's metrics should not add another non-GAAP figure into the hundreds of non-GAAP figures floating around already in that field. So I will still be happy to listen to every meaningful proposal in that field. So we are committed to make this a success as you know and to also share relevant metrics at that point in.
Roland Busch: The global footprint which we support, financing, super relevant. I mean, in many, many cases, we have a very good combination. It goes to business energies. I mean, I will talk a little bit later in my intro for the breakouts about one example, Paris Metro Line, where we are jointly working on a system. Siemens Smart Infrastructure comes in electrification. They come in with building technology for the surveillance part, any stations, tunnels, controls. Therefore, this is a lot where we can do together. You do not see that because it works in very many cases in projects where we are systemic. Egypt, it is a bigger one. Last but not least, they are paying very well, not only into our business and cash flow, but also into our sustainability agenda. We are really making a big difference there.
Time, when we feel we are mature for it and you can work with that then meaningfully but one last comment. If you allow you can rest assured that Roland and myself at least as ambitious as you guys are when it comes to profitability development at our software business.
Thank you and the other part is regarding the automation part.
You've commented some years ago instead of the challenging competitive environment in China. You then adjusted your offer towards that can you give us a little bit of a view right now sort of have you started to see market share going back up and should we foresee margins in China in automation could also go up.
Yeah.
Roland Busch: They are eligible to 100% aligned with 80%. This is where we are talking about a synergetic portfolio for industry, infrastructure, and transport, which is the core of our Siemens portfolio. Looking at the time, we have time for one last question. Martin, you want to close it off? Yes. Thank you. I just want to come back to the outlook for profitability. You've talked about prudence in 2026 within DI, but also the confidence in the midterm. When we look at your EPS guidance, it doesn't imply a huge amount of margin upside at the group level. You have talked about some incremental investments in innovation and things like that. When we think about that bridge from revenue growth to EPS growth, why should we expect a higher amount of growth coming from increased profitability?
So.
Through the later ones yes.
Because the Chinese market is still under under the the potential which we have their inventories either. So this is a general remark regarding our automation business fronts. Secondly, we see also a pickup not only in the qdoba the value the value for money market, this, especially with launching new products, but also in the other segments higher segments market is picking up in <unk>.
<unk> in the factory automation space.
Machine building is still hold back a little bit, but there we are picking up momentum we see traction in the market of our new products, which we launched as a reason why and I said before there's no engine, which we started.
To launch 20, new ones for example.
Oh, I OS a reboot and they wouldn't even go global this is a really super Super strong platform and once we do that.
New products and new products with our cost out which allows US also to drive our margins at the same time. So we're very careful about maintaining our margin they're still they're still in the very high end this higher money to earn on that one but don't underestimate if you do it right from the specification to the salt, saying to the manufacturing then you can kind of also.
Roland Busch: The second question, which is kind of linked to that, is obviously your leverage will drop when you deconsolidate Healthineers, your balance sheet's deployment capability goes up significantly either through buybacks or M&A. When we think about that EPS guidance, is that based on the portfolio as it is today or including some of the optionality for deploying your balance sheet in the future? Thank you. Yeah, thank you, Martin. I think it's still fair to call it prudent and not conservative because, I mean, there's such a hell lot of volatility in the markets, and also the geopolitical aspects that Roland has been discussing before, that it's really hard to predict in a fast-moving, short-cycle business what's going to happen when and at which point in time.
Drive your margins in that business going forward. It is a volume game. So therefore behalf to get traction and we have to sell more of those in the market.
The last point is that you, it's a different sales motion tubular learning that this value for money address different customers.
Customers, which didn't talk to yet so we reach them also with our digital platform, we talked about super relevant, but you still also need to have some feet on the street. There's a reason why we are happy that we have more of a double of our quota carrying people globally for the automation, but in particular in China. So therefore, it's a combination of having the right products and also gearing our market.
Roland Busch: We have been deliberately choosing a wide range for both top line and bottom line on the DI side to make sure that we know what we do and can live up to our own commitments. It does not exclude being better than the midpoint if circumstances allow. Of course, when it comes to top line growth dropping through, it is about investments and capital allocation. When we talk capital allocation, we talk about dividends and share buyback on the one hand side, but also on investing. I would like to repeat what Roland said in his presentation and what I tried to summarize in mine. I mean, we have been spending such a huge amount of money in shaping a technology leader in R&D. We will continue to do that. We are the AI-prone leader in the industrial space. Why missing out that opportunity?
Our go to market for eventually new customer market segments.
Very confident that we are picking up momentum there.
Hey.
Question from the media comes from uncle Amaya.
Yeah.
And thank you very much.
Two very short questions first on your software business.
Could you maybe quantify the softer margin is the margin of your software business I think there has been some speculation about it and is it fair to assume that yourself imagine it's dilutive.
As an industry margin.
And second question just to clarify in your growth target of 6% to 9% does this include any acquisitions. Thank you.
Roland Busch: We will still well balance investments and drop through to bottom line. That's what we did, I believe, meaningfully well throughout the last decade, and we will continue doing that. I'm absolutely convinced of that. Therefore, it's both investing into future at a point when paradigm is shifting. That's crucial to be a leader of the gang instead of a follower that will never make it again to the lead. Therefore, this is a part of it, reinvesting rationale, and that includes CapEx as well. On the other hand, that's why I mentioned and underpinned it a couple of times. The ultimate yardstick, I believe, is free cash flow. We are fully committed to delivering on those high levels that we delivered before, which again is an enabler to keep the high level of total shareholder return.
Yeah.
Thank you for the question I think our answer to your first Krishna already by commenting on that.
What has been asked before if we hit the intend to share software margin at this point in time, we would have done it.
I said also the reasoning for that we are in the process of completing a very successful SaaS transitioning we always said when we started to transit to enter into the transition to SaaS that we will consider.
Sharing metrics after completing the SaaS transition so being not there we stick to what we said.
And the second part of that question was implicitly.
With that as well because if we talked about the margin levels and the impact on the ti much in it or be able to exactly that would be to not to at the moment share something premature.
Roland Busch: That is also in part a bit answering the second part of your question. We have a very ambitious share buyback program, which is ahead of time in a meaningful format. If and when we complete that, potentially ahead of time, there would be another one. You can also expect us to again prudently share the ultimate outcome, free cash flow in a meaningful way with a progressive dividend, with a share buyback program, and also with meaningful share price development on the way forward. That's what we are committed to, and that's what we feel encouraged with. Again, I know that fiscal 2026 with that heavy impact on exchange rate is kind of hard to swallow. You may also recognize that in 12 years, I have the pleasure to do this annual press conferencing.
And I think there's nothing to add.
Regarding our midterm growth target, 6% to 9%. This is without Siemens healthiness and is it without M&A.
Yeah.
Let's see hands in the second row John.
Thank you, it's Jonathan Mounsey from BNP Paribas.
So first question, obviously, you've committed today to take health and he is down to financial asset status, which you also then elaborate is 20% or less.
You exited energy I think you already at the beginning made a commitment to a full exit.
Why not today make that commitment for Siemens health and he is.
And the second question just thinking out.
And I would suggest that the day after you Decontrol health and he is youre going to start getting questions about the rest of the portfolio and the ability is doing very well, we know that but then held the news is good business and it is a good business you exited those can you give the sort of synergistic reasons why mobility, maybe fits within the portfolio.
Roland Busch: We never used exchange rate as a parameter for guiding, but the relevance and magnitude in this fiscal year 2026 is a mandate and an imperative to do so to not mislead anyone. Midterm perspectives, we will be fine. Short term, as a matter of fact, will be impacted by exchange rate. If you add back this EUR 0.70 to 0.80 in EPS, that will be only lost by translation of US dollar if you take it black or white. If you add that back, you will see that we clearly double digitally increasing EPS. I think operationally that makes a hell lot of sense to steer with a slow but steady hand and not overreacting.
Let me take the first part of your question John I think it's important.
First of all I do not think that we should and can compare the energy listing and exiting to the health insurance listing and exiting was completely different rationale don't want to repeat all that what you know anyhow.
So therefore, taking a relevant step at the right point in time I believe is a good thing to do.
At the moment, we are busily preparing for those crucial steps that it will take to get that's been done.
Being a financial investor in the meaning of the word means being a financial investor than in a financial Investor is also many of your clients are.
Would take prudent decisions, then on whether to hold or not an asset at a certain point in time, we are not at that point yet. So therefore, therefore, we don't want to jump too premature conclusions.
But maybe you consider that playing with words is the relevant piece financial assets our financial assets.
So mobility is a completely different situation. So let me start with the technology.
Currently.
I think it's fair to say that Siemens mobility is playing in the technological leadership.
Regardless, whether you talk trains the efficiency of our trains talk about a recent win SBB. It was not one by the by the price. It was one definitely by the technology what do we do.
Efficiency maintenance cost service cost predictive maintenance or that sits on solid Siemens technologies. The signaling the cloud was development not possible without the technology, which we talked about in our technology complex cybersecurity cloud machine learning core which drives the predictive mentioned that her trains we are.
We are saving one train.
Oh two trains in some cases in the fleet because we have an uptime all of that is based on on the products, which we do together was technology, which we're scaling across the company and mobility in particular loses it including also controls for example, it goes further.
Genuinely work working on the genuine new product development. So as you get a tender that AI gives you an idea of how the how the train looks like but you should offer based on all the manufacturer trains we did in the past I can learn it and training. So this is there's a next level and this is technology, which we bring to the party and make make out of Siemens mobility technology.
Is that what it is today, which is a clear marinas much in leading and wait for a new normal trains go on speed to market. How they look like so then go along that supply chain management I mean, it's commodities, it's still green steel aluminum green aluminum. This is a super leverage what we do there to make the.
Customers are asking for that we need to also offer that without adverse impact on our costs.
The same holds true for hardware and the like.
The global the global footprint, which will support financing super relevant I mean in many many cases, we have a very good combination then it goes to business synergies I mean, I will talk a little bit later in my intro for the Breakouts about one example, Paris mutual line, where we are currently working on on our system.
Humans are smart infrastructure comes in electrification they come in with building technology for the civilians part.
Nations tunnels controls. So therefore this is a lot where we can do together you don't see that because it works in Burma. Many cases in projects, where we are systemic in Egypt, it's a bigger one so therefore, unless but at least they are paying very well not only into a.
Into our business.
Business and cash flow, but also into our sustainability agenda, we are really making a big difference there.
Eligible to 100% aligned because 80% so it's a business, where we're talking about a synergetic portfolio for industry infrastructure and transport.
Which is the core of our Siemens portfolio.
So looking at the time, we have time for one last question.
Mike you want to.
Close it off.
Yes. Thank you I wanted to come back to the outlook for profitability as you've talked about prudent in 2026 within D. I, but also the confidence in the midterm, but when we look at your EPS guidance. It doesn't imply a huge amount of margin upside at the group level and you have talked about some incremental investments in innovation and things.
Like that but when we think about that bridge from revenue growth EPS growth why should we expect a higher amount of growth coming from increased profitability and the second question, which is kind of linked to that is obviously your leverage will drop when you deconsolidation health in years your balance sheets deployment capability goes up significantly year through buybacks or M&A.
And we think about the EPS guidance is that based on the portfolio as it is today or including some of the optionality for deploying your balance sheet in the future. Thank you.
Thank you Martin.
I think it's still fair to call it prudent.
Not conservative because I mean, there's such a hell a lot of volatility in the markets and also the geopolitical aspects central and has been discussing before that it's really hard to predict in a fast moving short cycle business, what's going to happen when and at which point in time. So we have been deliberately choosing a y.
Mid range for both topline and bottom line on the Ti side to make sure that we know what we do and can live up to our own commitments that doesn't exclude being better than the midpoint if circumstances allow.
Then.
Of course, when it comes to top line growth dropping through.
It's about investments and capital allocation when we talk capital allocation, when we talk about dividends and share buyback on the one hand side, but also on investing and I would like to repeat what Roland said in his presentation and what I tried to summarize in mind I mean, we have been spending such a huge amount of money in shaping technology.
Knowledge leader in R&D, we will continue to do that we are indeed, AI prone leader in the industrial space, where I'm missing out that opportunity and we will still.
Well balance investments and dropped through to bottom line. That's what we did I believe meaningfully well throughout the last decade, and we will continue doing that I'm absolutely convinced of that so therefore, it's both investing into future at a point when paradigm is shifting that's crucial.
To be a leader of the gang instead of a follower that will never make it again to the lead. So therefore this is a part of it and are reinvesting rationale and that includes capex as well.
On the other hand, that's why I mentioned and underpins it a couple of times the ultimate the ultimate Yardstick I believe is free cash flow.
And we are fully committed.
So delivering on those high levels that we delivered before which again is an enabler to keep the high level of total shareholder return and that is also in part a bit answering the second part of your question when we have a very ambitious.
Share buyback program, which is ahead of time in a meaningful for much if and when we complete that potentially ahead of time they would be another one.
And you can also expect us to again prudently share the ultimate outcome free cash flow in a meaningful way with our progressive dividend with a share buyback program and also with meaningful share price development underway forward. That's what we are committed to and that's what we feel.
Encouraged with.
I know that fiscal 'twenty, six with that heavy impact on exchange rates.
Kind of hard to swallow, but you may also recognize that in 12 years and I have the pleasure to do this annual press conference Ing, we never used exchange rage as a parameter for guiding but the relevance and magnitude in this fiscal year 26 is a mandate.
An imperative to do so so not mislead anyone so midterm perspectives, we will be fine short term.
As a matter of fact will be impacted by exchange rate. If you add back the 70 to 80 euro cents in EPS that will be only.
Lost by translation of U S. Dollar if you would take it black or white, if you add that back you will see that we clearly double digit totally increasing EPS.
I think operationally that makes a hell of a sense.
So still with the slow, but steady hand and not overreacting.
[music].