Q4 2026 Siemens Energy AG Pre-Close Earnings Call

September 30, 2026

Operator: Good afternoon, and welcome to the Siemens Energy's pre-close call for the Q4 and fiscal year 2026. Before we begin, please note that today's call is being recorded. The recording will be available on Siemens Energy's website until the fiscal year results are published. Before we start, I would like to remind you that the information and forward-looking statements disclaimer, which applies to the comments made during this call. At this time, I would like to hand over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Speaker #1: Good afternoon, and welcome to the Siemens Energy's pre-close group call for the fourth quarter and fiscal year 2026. Before we begin, please note that today's call is being recorded.

Speaker #1: The recording will be available on Siemens Energy's website until the fiscal year results are published. Before we start, I would like to remind you that the information and forward-looking statements disclaimer applies to the comments made during this call.

Speaker #1: At this time, I would like to hand over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Speaker #2: Thank you so much, Moritz. Good afternoon and good evening to those joining us from Asia. And a warm welcome to the Siemens Energy pre-close call for the fourth quarter and fiscal year 2026.

Tobias Hang: Thank you so much, Morris. Good afternoon and good evening to those joining us from Asia, and a warm welcome to the Siemens Energy pre-close call for the Q4 and fiscal year 2026. The purpose of today's call is to reinforce our previously communicated guidance and to recap the key messages that we have consistently shared since our Q3 results. We plan to publish our Q4 and fiscal year 2026 results on Wednesday, 11 November at 7:00 AM CET, with a webcast scheduled for 10:00 AM CET that morning, which will be extended to 90 minutes. We will take you through the major developments during Q4 fiscal year 2026, but also provide you with our fiscal year 2027 outlook and fiscal year 2030 targets based on the individual business areas performance, as well as an updated capital allocation framework until fiscal year 2030.

Speaker #2: The purpose of today's call is to reinforce our previously communicated guidance and to recap the key messages that we have consistently shared since our Q3 results.

Speaker #2: We plan to publish our Q4 and fiscal year 2026 results on Wednesday, November 11, at 7:00 AM CET, with the webcast scheduled for 10:00 AM CET that morning.

Tobias Hang: We plan to publish our Q4 and fiscal year 2026 results on Wednesday, 11 November at 7:00 AM CET, with a webcast scheduled for 10:00 AM CET that morning, which will be extended to 90 minutes. We will take you through the major developments during Q4 fiscal year 2026, but also provide you with our fiscal year 2027 outlook and fiscal year 2030 targets based on the individual business areas performance, as well as an updated capital allocation framework until fiscal year 2030.

Speaker #2: This session will be extended to 90 minutes. We will take you through the major developments during Q4, fiscal year 2026, but also provide you with our fiscal year 2027 outlook and fiscal year 2030 targets based on the individual business areas' performance, as well as an updated capital allocation framework until fiscal year 2030.

Speaker #2: As usual, we will share our company-compiled consensus one week ahead of the earnings release, and our quiet period will begin immediately after this call.

Tobias Hang: As usual, we will share our company-compiled consensus one week ahead of the earnings release, and our quiet silent periods will begin immediately after this call. Let me briefly guide you through today's agenda. I will start by recapping the key messages that we have consistently communicated over recent weeks and share our view of the current market environment. I will then review the performance and market dynamics across Gas Services, Grid Technologies, Transformation of Industry, and Siemens Gamesa. I will then address Q4 seasonality and cash flow and conclude with a few additional remarks. We will finish with a short Q&A session to clarify statements already made during the quarter. Please remember that we cannot provide information beyond what has already been communicated. Together with our management team, we have held numerous investor meetings over the past few weeks.

Speaker #2: Let me briefly guide you through today's agenda. I will start by recapping the key messages that we have consistently communicated over recent weeks, and share our view of the current market environment.

Speaker #2: I will then review the performance and market dynamics across gas services, grid technologies, transformation of industry, and Siemens Gamesa. I will then address fourth quarter seasonality, and cash flow, and conclude with a few additional remarks.

Tobias Hang: I will then review the performance and market dynamics across Gas Services, Grid Technologies, Transformation of Industry, and Siemens Gamesa. I will then address Q4 seasonality and cash flow and conclude with a few additional remarks. We will finish with a short Q&A session to clarify statements already made during the quarter. Please remember that we cannot provide information beyond what has already been communicated. Together with our management team, we have held numerous investor meetings over the past few weeks.

Speaker #2: We will finish with a short Q&A session to clarify statements already made during the quarter. Please remember that we cannot provide information beyond what has already been communicated.

Speaker #2: Together with our management team, we have held numerous investor meetings over the past few weeks. Let me therefore recap the four key messages we have consistently communicated.

Tobias Hang: Let me therefore recap the four key messages we have consistently communicated. First, our markets remain structurally strong and diversified. Rising electricity demands, electrification, resilience, and infrastructure replacement provide the foundation of the strong markets while data center activities add further upside. Second, execution is becoming a key determinant of value creation. Our focus is on converting our record backlog into revenue, profit, and cash with disciplined project delivery, capacity ramp-ups, and operational excellence. Third, a profitable growth expansion runway extends well beyond the current order cycle. Today's Gas Services equipment orders build the installed base for recurring service revenues and cash generation well into the next decades. Grid Technologies benefits from long-term infrastructure investments, multi-year visibility, and enduring electrification trends.

Speaker #2: First, our markets remain structurally strong and diversified. Rising electricity demand, electrification, resilience, and infrastructure replacement provide the foundation of strong markets, while data center activities add further upside.

Speaker #2: Second, execution is becoming a key determinant of value creation. Our focus is on converting our record backlog into revenue, profit, and cash. Our discipline is project delivery, capacity ramp-ups, and operational excellence.

Tobias Hang: Our focus is on converting our record backlog into revenue, profit, and cash with disciplined project delivery, capacity ramp-ups, and operational excellence. Third, a profitable growth expansion runway extends well beyond the current order cycle. Today's Gas Services equipment orders build the installed base for recurring service revenues and cash generation well into the next decades. Grid Technologies benefits from long-term infrastructure investments, multi-year visibility, and enduring electrification trends.

Speaker #2: Third, the profitable growth expansion runway extends well beyond the current order cycle. Today's gas services equipment orders build the installed base for recurring service revenues and cash generation well into the next decade.

Speaker #2: Grid technologies benefits from long-term infrastructure investment. Multi-year visibility and enduring electrification trends. Fourth, stronger earnings and cash generation provide increasing strategic flexibility. We are balancing investments in profitable growth, portfolio development, and sustainable shareholder returns while preserving the balance sheet strengths required for our long-cycle project business.

Tobias Hang: Fourth, stronger earnings and cash generation provide increasing strategic flexibility, via balancing investments in profitable growth, portfolio development, and sustainable shareholder returns while preserving the balance sheet strength required for our long cycle project business. Overall, Siemens Energy is entering its next phase from a position of strength, supported by favorable market fundamentals, disciplined execution, a long-duration growth runway, and increasing financial flexibility. Let me now focus on the current environment. Our core message remains unchanged. We continue to operate in structurally growing electricity markets, supported by electrification, rising power consumption, the need for reliable and dispatchable generation, Grid expansion, and the replacement of aging infrastructure. Demand remains broad-based across geographies, customer groups, and applications. Data centers are an important additional driver, but they are not the foundation of our outlook. General high electricity demand, resilience, security of supply, regulated Grid investment, and replacement demand remain the primary structural drivers.

Speaker #2: Overall, Siemens Energy is entering its next phase from a position of strengths, supported by favorable market fundamentals, disciplined execution, a long-duration growth runway, and increasing financial flexibility.

Speaker #2: Let me now focus on the current environment. Our core message remains unchanged. We continue to operate in structurally growing electricity markets, supported by electrification, rising power consumption, the need for reliable and dispatchable generation, grid expansion, and the replacement of aging infrastructure.

Tobias Hang: Our core message remains unchanged. We continue to operate in structurally growing electricity markets, supported by electrification, rising power consumption, the need for reliable and dispatchable generation, Grid expansion, and the replacement of aging infrastructure. Demand remains broad-based across geographies, customer groups, and applications. Data centers are an important additional driver, but they are not the foundation of our outlook. General high electricity demand, resilience, security of supply, regulated Grid investment, and replacement demand remain the primary structural drivers.

Speaker #2: Demand remains broad-based across geographies, customer groups, and applications. Data centers are an important additional driver, but they are not the foundation of our outlook.

Speaker #2: General high electricity demand resilience, security of supply, regulated grid investment, and replacement demands remain the primary structural drivers. In addition, the increasingly frequent periods of extreme temperature experienced across Europe and other regions globally in recent months reinforce our expectation that cooling and air conditioning will account for an increasing share of global electricity demand in the years ahead.

Tobias Hang: In addition, the increasingly frequent periods of extreme temperature experienced across Europe and other regions globally in recent months reinforce our expectation that cooling and air conditioning will account for an increasing share of global electricity demand in the years ahead. Across our markets, the principal constraint is not underlying demand. It is the pace at which physical infrastructure can be permitted, financed, built, connected, and commissioned. Across the industry, customer demand continues to exceed the pace at which generation, transmission, and supporting infrastructure can realistically be brought to market. We continue to apply disciplined project selection to ensure attractive pricing conditions, long-term service opportunities, and contractual protection. The execution of our record backlog is therefore a core message as we close the fiscal year. Our priority is to convert backlog into revenue, profit, and cash with disciplined project execution, timely factory ramp-ups, and operational excellence.

Speaker #2: Across our markets, the principal constraint is not underlying demand. It is the pace at which physical infrastructure can be permitted, financed, built, connected, and commissioned.

Speaker #2: Across the industry, customer demand continues to exceed the pace at which generation, transmission, and supporting infrastructure can realistically be brought to market. We continue to apply disciplined project selection to ensure attractive pricing conditions, long-term service opportunities, and contractual protection.

Tobias Hang: Across the industry, customer demand continues to exceed the pace at which generation, transmission, and supporting infrastructure can realistically be brought to market. We continue to apply disciplined project selection to ensure attractive pricing conditions, long-term service opportunities, and contractual protection. The execution of our record backlog is therefore a core message as we close the fiscal year. Our priority is to convert backlog into revenue, profit, and cash with disciplined project execution, timely factory ramp-ups, and operational excellence.

Speaker #2: The execution of our record backlog is, therefore, a core message as we close the fiscal year. Our priority is to convert backlog into revenue, profit, and cash.

Speaker #2: With disciplined project execution, timely factory ramp-ups, and operational excellence, let's now turn to the broader market environment. For gas turbines, our planning assumptions remain some annual market of around 110 to 120 gigawatts over the coming years.

Tobias Hang: Let's now turn to the broader market environment. For gas turbines, our planning assumptions remains an annual market of around 110 to 120 gigawatts over the coming years, with a further 10 to 20 gigawatts of potential upside from data centers. Electricity demand growth, fleet replacement, coal to gas shift, and the increasing need for dispatchable capacity provide a broad and durable foundation for gas turbine markets and account for up to 80 gigawatts. The remainder of the above-mentioned demand forecast is driven by the build-out of data center infrastructure. The gas market remains supply constrained as industry capacity additions continue to be orderly. Smaller players and small to mid-size frames are benefiting from the current market opportunity. But this does not alter the structural market balance for large gas turbines, which dominate the market due to their efficiency and lower lifecycle costs. Pricing and Gas Services remains very strong.

Speaker #2: With a further 10 to 20 gigawatts of potential upside from data centers, electricity demand growth will lead replacements, coal-to-gas shift, and the increasing need for dispatchable capacity provide a broad and durable foundation for gas turbine markets and account for up to 80 gigawatts.

Tobias Hang: The remainder of the above-mentioned demand forecast is driven by the build-out of data center infrastructure. The gas market remains supply constrained as industry capacity additions continue to be orderly. Smaller players and small to mid-size frames are benefiting from the current market opportunity. But this does not alter the structural market balance for large gas turbines, which dominate the market due to their efficiency and lower lifecycle costs. Pricing and Gas Services remains very strong.

Speaker #2: The remainder of the above-mentioned demand forecast is driven by the build-out of data center infrastructure. The gas market remains supply constrained, as industry capacity additions continue to be orderly.

Speaker #2: Smaller players and small to mid-sized frames are benefiting from the current market opportunity. But this does not alter the structural market balance for large gas turbines, which dominate the market due to their efficiency and lower lifecycle costs.

Speaker #2: Pricing in gas services remains very strong. Attractive delivery windows continue to command a premium, especially in the United States, and elevated U.S. pricing also supports other regions.

Tobias Hang: Attractive delivery windows continue to command a premium, especially in the United States, and elevated US pricing also supports other regions. At the same time, order intake per gigawatt should not be used as pricing indicator because frame size, geography, hertz rating, scope, and the new unit and service mix can materially distort the metric. During our Q4 earnings call, we will provide, as usual, the dynamics of the backlog margin improvement year over year. In Grid Technologies, pricing trends are slightly differentiated by region. In the US market, we continue to see premium pricing overall and especially where delivery slots are available. While the pricing dynamic in regulated markets such as Europe have stabilized at a high level. Going forward, margin expansion will increasingly be driven by backlog conversion, cost management, capacity utilization, and operational excellence, rather than further broad-based price increases.

Speaker #2: At the same time, order intake per gigawatt should not be used as a pricing indicator, because frame size, geography, Hertz rating scope, and the new unit and service mix can materially distort that metric.

Speaker #2: During our Q4 earnings call, we will provide, as usual, the dynamics of backlog margin improvement year over year. In Grid Technologies, pricing trends are slightly differentiated by region.

Tobias Hang: In Grid Technologies, pricing trends are slightly differentiated by region. In the US market, we continue to see premium pricing overall and especially where delivery slots are available. While the pricing dynamic in regulated markets such as Europe have stabilized at a high level. Going forward, margin expansion will increasingly be driven by backlog conversion, cost management, capacity utilization, and operational excellence, rather than further broad-based price increases.

Speaker #2: In the US market, we continue to see premium pricing overall, and especially where delivery slots are available. While the pricing dynamic in regulated markets, such as Europe, has stabilized at a high level.

Speaker #2: Going forward, margin expansion will increasingly be driven by backlog conversion, cost management, capacity utilization, and operational excellence, rather than further broad-based price increases. Let's now have a deeper dive into Gas Services.

Tobias Hang: Let's now have a deeper dive into Gas Services. Demand continues to be exceptionally strong and diversified. Contractual terms and conditions remain favorable, and the fiscal year 2027 project pipeline provides strong visibility. As communicated, the Q4 order intake is expected to be below the exceptionally strong levels of the first three quarters. This reflects normal project phasing and the large project nature of the business, not a change in the underlying market. Order intake should therefore be assessed on a full year basis rather than on a single quarter. Slot reservation agreements remain an important part of our commercial process. They are structured commitments rather than speculative reservations and are generally intended to convert into firm orders within a defined period, typically around 6 months.

Speaker #2: Demand continues to be exceptionally strong and diversified. Contractual terms and conditions remain favorable, and the fiscal year 2027 project pipeline provides strong visibility. As communicated, the fourth quarter order intake is expected to be below the exceptionally strong levels of the first three quarters.

Speaker #2: This reflects normal project phasing and the large project nature of the business, not a change in the underlying market. Order intake should therefore be assessed on a full year basis rather than on a single quarter.

Speaker #2: Slot reservation agreements remain an important part of our commercial process. They are structured commitments rather than speculative reservations, and are generally intended to convert into firm orders within a defined period.

Tobias Hang: Slot reservation agreements remain an important part of our commercial process. They are structured commitments rather than speculative reservations and are generally intended to convert into firm orders within a defined period, typically around 6 months.

Speaker #2: Typically around six months. Reservation fees and advance payments provide economic protection and are project selection process remains highly disciplined to ensure that the projects we select are viable and can support 15 to 20 years of long-term service revenues.

Tobias Hang: Reservation fees and advanced payments provide economic protection, and our project selection process remains highly disciplined to ensure that the projects we select are viable and can support 15 to 20 years of long-term service revenues. We have not seen any delays or cancellations of previously signed slot reservation agreements or orders. During the first three quarters, we booked around 40 gigawatts of firm gas turbine orders, including 15 gigawatts in Q3. Total customer commitments, including reservation agreements, stood at 95 gigawatts and are trending towards our communicated approximately 100 gigawatts by fiscal year-end. Our capacity discipline remains unchanged. We continue to target approximately 30 gigawatts of annual delivery capacity by 2030. The focus is now on executing the capacity expansion announced at the Capital Market Day, including strengthening critical supply chain through vertical integration and expanded in-house manufacturing capabilities.

Speaker #2: We have not seen any delays or cancellations of previously signed slot reservation agreements or orders. During the first three quarters, we booked around 40 gigawatts of firm gas turbine orders, including 15 gigawatts in Q3.

Tobias Hang: Total customer commitments, including reservation agreements, stood at 95 gigawatts and are trending towards our communicated approximately 100 gigawatts by fiscal year-end. Our capacity discipline remains unchanged. We continue to target approximately 30 gigawatts of annual delivery capacity by 2030. The focus is now on executing the capacity expansion announced at the Capital Market Day, including strengthening critical supply chain through vertical integration and expanded in-house manufacturing capabilities.

Speaker #2: Total customer commitments, including reservation agreements, stood at 95 gigawatts and are trending towards our communicated approximately 100 gigawatts by fiscal year-end. Our capacity discipline remains unchanged.

Speaker #2: We continue to target approximately 30 gigawatts of annual delivery capacity by 2030. The focus is now on executing the capacity expansion announced at the capital market day.

Speaker #2: Including strengthening critical supply chains through vertical integration and expanded in-house manufacturing capabilities. In parallel, we are unlocking additional capacity and efficiency from our existing gas turbine facilities through automation, robotics, and continuous productivity improvements.

Tobias Hang: In parallel, we are unlocking additional capacity and efficiency from our existing gas turbine facilities through automation, robotics, and continuous productivity improvements. This approach allows us to support growth by maintaining disciplined capital allocation and attractive returns. During previous quarters, there have been many discussions about the industry supply of blades and vanes. We are strengthening vertical integration and have signed framework agreements with our suppliers to support deliveries into the 2030s. All our key components are multi-sourced to avoid dependency on individual suppliers. Our investment in the in-house blades and vanes production capabilities position us well, particularly as a long-term service business requires around 70% of blades and vanes. The new unit production capacity itself, however, is usually not shared with the service business as the inspections typically take place at the customer site.

Speaker #2: This approach allows us to support growth while maintaining disciplined capital allocation and attractive returns. During previous quarters, there have been many discussions about the industry supply of blades and vanes.

Speaker #2: We are strengthening vertical integration and have signed framework agreements with our suppliers to support deliveries into the 2030s. All key components are multi-sourced to avoid dependency on individual suppliers.

Tobias Hang: All our key components are multi-sourced to avoid dependency on individual suppliers. Our investment in the in-house blades and vanes production capabilities position us well, particularly as a long-term service business requires around 70% of blades and vanes. The new unit production capacity itself, however, is usually not shared with the service business as the inspections typically take place at the customer site.

Speaker #2: Our investment in the in-house blades and vanes production capabilities positions us well, particularly as the long-term service business requires around 70% of blades and vanes.

Speaker #2: The new unit production capacity itself, however, is usually not shared with the service business, as the inspections typically take place at the customer site.

Speaker #2: Medium-sized gas turbine capacity has increased from around 50 units in fiscal year 2025 to around 80 units this year. The large gas turbine expansion from 35 to 50 units remains fully on track.

Tobias Hang: Medium-sized gas turbine capacity has increased from around 50 units in fiscal year 2025 to around 80 units this year. Large gas turbine expansion from 35 to 50 units remains fully on track and will contribute from fiscal year 2027 onwards. As we experienced in the Q3, revenues were positively impacted by higher medium-sized turbine capacity. For this quarter, we expect this to remain at similar levels. On profitability, new unit margins continue to expand. Orders booked today carry better margins than both backlog executed in the past and orders signed in the H1 of the fiscal year. Margins embedded in current slot reservation agreements also continue to be higher. Backlog conversion over the next 2 to 3 years and over longer periods for larger gas turbines therefore support further sustainable margin progression. Service remains highly attractive and a recurring part of the business.

Speaker #2: And will contribute from fiscal year 2027 onwards. As we experienced in the third quarter, revenues were positively impacted by higher medium-sized turbine capacity. For this quarter, we expect this to remain at similar levels.

Speaker #2: Our profitability and unit margins continue to expand. Orders booked today carry better margins than both. The backlog executed in the past and orders signed in the first half of the fiscal year.

Tobias Hang: Orders booked today carry better margins than both backlog executed in the past and orders signed in the H1 of the fiscal year. Margins embedded in current slot reservation agreements also continue to be higher. Backlog conversion over the next 2 to 3 years and over longer periods for larger gas turbines therefore support further sustainable margin progression. Service remains highly attractive and a recurring part of the business.

Speaker #2: Margins embedded in current slot reservation agreements also continue to be higher. Backlog conversion over the next two to three years— and over a longer period for larger gas turbines— therefore supports further sustainable margin progression.

Speaker #2: Service remains a highly attractive and recurring part of the business. Long-term service agreements average around 17 years, and at last year's CMD, we communicated that the lifetime service opportunity is around €400 million per gigawatt.

Tobias Hang: Long-term service agreements average around 17 years, and at last year's CMD, we have communicated that the lifetime service opportunity is around EUR 400 million per gigawatt. The service benefit follows the delivery, installation, and warranty phases, which means the full contribution from today's new unit orders develops gradually over time. Please consider that depending on the frame size, installation takes 12 to 24 months, and the warranty phase normally lasts another 24 months. This means the first long-term service revenue streams typically start three to four years after our products leave the factory. While modification and upgrade opportunities arise only after six to seven years. More broadly, each unit delivered today expands the installed base, and that will generate recurring service revenues, cash flows, and customer engagement opportunities for decades to come. Let me now turn to Grid Technologies.

Speaker #2: The service benefit follows the delivery, installation, and warranty phases, which means the full contribution from today's new unit orders develops gradually over time. Please consider that, depending on the frame size, installation takes 12 to 24 months, and the warranty phase normally lasts another 24 months.

Speaker #2: This means the first long-term service revenue streams typically start three to four years after our products leave the factory. By modification and upgrade opportunities arise only after six to seven years.

Tobias Hang: This means the first long-term service revenue streams typically start three to four years after our products leave the factory. While modification and upgrade opportunities arise only after six to seven years. More broadly, each unit delivered today expands the installed base, and that will generate recurring service revenues, cash flows, and customer engagement opportunities for decades to come. Let me now turn to Grid Technologies.

Speaker #2: More broadly, each unit delivered today expands the installed base, and that will generate recurring service revenue, cash flows, and customer engagement opportunities for decades to come.

Speaker #2: Let me now turn to grid technologies. The market environment remains strong, supported by regulated grid investments, the replacement of 30- to 40-year-old assets, interconnection, grid stabilization, and resilience.

Tobias Hang: The market environment remains strong, supported by regulated grid investments, the replacement of 30 to 40-year-old assets, interconnection, grid stabilization, and resilience. Data centers are additive to the story, but they are not the foundation. Our momentum continues to be led by the product business, particularly large power transformers, with Europe and North America remaining the strongest regions. Visibility is structurally long. HVDC and large power transformers provide multi-year visibility into the early 2030s, while switchgear is more transactional but supported by predictable grid investment plans. As expected, in Q4, we did not book an HVDC project, so order intake remains similar to previous quarters without any large project one-offs. We are happy to report that the first brownfield extensions for large power transformers and gas-insulated switchgears started to come online in Q3. We are also expanding our solutions and EPC capacity, particularly in the fast-growing US market.

Speaker #2: Data centers are additive to the story, but they are not the foundation. Our momentum continues to be led by the product business, particularly large power transformers, with Europe and North America remaining the strongest regions.

Speaker #2: Visibility is structurally long. HVDC and large power transformers provide multi-year visibility into the early 2030s, while switchgear is more transactional, but supported by predictable grid investment plans.

Tobias Hang: HVDC and large power transformers provide multi-year visibility into the early 2030s, while switchgear is more transactional but supported by predictable grid investment plans. As expected, in Q4, we did not book an HVDC project, so order intake remains similar to previous quarters without any large project one-offs. We are happy to report that the first brownfield extensions for large power transformers and gas-insulated switchgears started to come online in Q3. We are also expanding our solutions and EPC capacity, particularly in the fast-growing US market.

Speaker #2: As expected, in the fourth quarter we did not book an HVDC project, so order intake remains similar to previous quarters, without any large project one-offs.

Speaker #2: We are happy to report that the first brownfield expansions for large power transformers and gas-insulated switchgears started to come online in Q3. We are also expanding our solutions and EPC capacity.

Speaker #2: Particularly in the fast-growing US market. The US continues to deliver strong growth, driven by new-generation data center demand and the need for stronger connections and grid reinforcement.

Tobias Hang: The US continues to deliver strong growth driven by new generation, data center demand, and the need for stronger connections and grid reinforcement. The brownfield extensions are supporting a further increase in Q4 revenue and higher profitability, consistent with the Grid Technologies guidance upgrade announced in Q2. Profitability development continues to be driven by higher volumes, a better margin profile in the executed backlog, and disciplined execution. With pricing at an elevated level, operational excellence, capacity utilization, and cost management will become even more important drivers for further improvements. Europe continues to be a strong and attractive market for Grid Technologies, with significant growth opportunities driven by sustained interconnection and grid investment needs. Following a period of substantial project awards in HVDC, customers and the industry are actively advancing execution and positioning the supply chain for the next phase of growth.

Speaker #2: But brownfield expansions are supporting a further increase in fourth-quarter revenue and higher profitability, consistent with Grid Technologies' guidance upgrades announced in the second quarter.

Speaker #2: Profitability developments continue to be driven by higher volumes, a better margin profile in the executed backlog, and disciplined execution. With pricing and an elevated level of operational excellence, capacity utilization and cost management will become even more important drivers for further improvements.

Tobias Hang: Europe continues to be a strong and attractive market for Grid Technologies, with significant growth opportunities driven by sustained interconnection and grid investment needs. Following a period of substantial project awards in HVDC, customers and the industry are actively advancing execution and positioning the supply chain for the next phase of growth.

Speaker #2: Europe continues to be a strong and attractive market for grid technologies, with significant growth opportunities driven by sustained interconnection and grid investment needs. Following a period of substantial project awards in HVDC, customers and the industry are actively advancing execution and positioning the supply chain for the next phase of growth.

Tobias Hang: We remain confident in the long-term demand outlook and in our planned execution capacities. As previously communicated, we expect to book the next HVDC order in early fiscal year 2027. Our digital grid strategy is deliberately focused on intelligent, digitally enabled equipment rather than a broad software platform. Camlin and Noedra's capabilities, combined with our collaboration with NVIDIA, strengthen and accelerate this focused approach. Let's continue with Transformation of Industry. Transformation of Industry continues to be a strong and reliable earnings and cash contributor, supported by a balanced new units and service portfolio as well as attractive end markets. As communicated, Siemens Energy is preparing the legal and operational separation of the business. The objective is to establish a self-sustaining industrial energy solutions company with greater strategic and financial flexibility. The range of options includes co-investors or private ownership, as well as capital market transaction.

Speaker #2: We remain confident in the long-term demand outlook and in our planned execution capacities. As previously communicated, we expect to book the next HVDC order in early fiscal year 2027.

Speaker #2: Our digital grid strategy is deliberately focused on intelligent digitally enabled equipment rather than a broad software platform. Temlin and Noredra's capabilities combined with our collaboration with Nvidia strengthen and accelerate this focused approach.

Speaker #2: Let's continue with transformation of industry. Transformation of industry continues to be a strong and reliable earnings and cash contributor. Supported by a balanced new units and service portfolio, as well as attractive end markets.

Tobias Hang: Let's continue with Transformation of Industry. Transformation of Industry continues to be a strong and reliable earnings and cash contributor, supported by a balanced new units and service portfolio as well as attractive end markets. As communicated, Siemens Energy is preparing the legal and operational separation of the business. The objective is to establish a self-sustaining industrial energy solutions company with greater strategic and financial flexibility. The range of options includes co-investors or private ownership, as well as capital market transaction.

Speaker #2: As communicated, Siemens Energy is preparing the legal and operational separation of the business. The objective is to establish a self-sustaining industrial energy solutions company with greater strategic and financial flexibility.

Speaker #2: The range of options includes co-investors or private ownership as well as capital market transaction. Siemens Energy intends to deconsolidate transformation of industry by retaining a meaningful minority stake.

Tobias Hang: Siemens Energy intends to reconsolidate Transformation of Industry by retaining a meaningful minority stake. This would support continuity and customer trust in businesses with long-term service commitments by preserving participation and potential future value creation. The strategic rationale remains clear. The electricity business has increasing capital requirements, while Transformation of Industry serves different markets, customers, and investment priorities with limited customer and sales synergies. A standalone setup would sharpen strategic focus and provide greater flexibility and access to capital. No final decision is expected before around mid-calendar 2027. We are initiating the process from a position of strength. The business is profitable, cash generative, and has a good order book, giving us flexibility to pursue the option that creates the greatest value. Now let's move to Siemens Gamesa. First positive quarterly results since Q4 of fiscal year 2022 marked a significant turnaround milestone.

Speaker #2: This would support continuity and customer trust in businesses with long-term service commitments, by preserving participation and potential future value creation. The strategic rationale remains clear.

Speaker #2: The electricity business have increasing capital requirements while transformation of industry serves different markets, customers and investment priorities with limited customer and sales synergies. A standalone setup with sharpened strategic focus and provide greater flexibility and access to capital.

Tobias Hang: A standalone setup would sharpen strategic focus and provide greater flexibility and access to capital. No final decision is expected before around mid-calendar 2027. We are initiating the process from a position of strength. The business is profitable, cash generative, and has a good order book, giving us flexibility to pursue the option that creates the greatest value. Now let's move to Siemens Gamesa. First positive quarterly results since Q4 of fiscal year 2022 marked a significant turnaround milestone.

Speaker #2: No final decision is expected before around mid-calendar 2027. We are initiating the process from a position of strengths. The business is profitable, cash generative and has a good order book giving us flexibility to pursue the option that creates the greatest value.

Speaker #2: Now let's move to Siemens Gamesa. The first positive quarterly results since the fourth quarter of fiscal year 2022 marked a significant turnaround milestone. Our full year break even target remains firmly on track.

Tobias Hang: Our full-year breakeven target remains firmly on track. Turnaround is not yet complete and execution discipline, quality management, and cost efficiency remain key priorities. In offshore, fiscal year 2026 order intake has been below our expectation as project decisions have shifted to the next fiscal year. The underlying opportunities remain intact, with many projects now positioned to support order intake in fiscal year 2027. The current European offshore build-out of around 4 to 5 gigawatts per year remains below the level required for a more sustainable market, which would be closer to 8 to 9 gigawatts annually. We will book one large offshore order this quarter, but do not expect a full catch-up for the offshore orders that have been pushed out for fiscal year 2027. In onshore, our approach remains selective and service-led rather than volume-led.

Speaker #2: Turnaround is not yet complete, and execution discipline, quality management, and cost efficiency remain key priorities. In Offshore, fiscal year 2026 order intake has been below our expectations, as project decisions have shifted to the next fiscal year.

Speaker #2: The underlying opportunities remain intact. With many projects now positioned to support order intake in fiscal year 2027. The current European offshore build out of around 4 to 5 gigawatts per year remains below the level required for a more sustainable market.

Tobias Hang: The current European offshore build-out of around 4 to 5 gigawatts per year remains below the level required for a more sustainable market, which would be closer to 8 to 9 gigawatts annually. We will book one large offshore order this quarter, but do not expect a full catch-up for the offshore orders that have been pushed out for fiscal year 2027. In onshore, our approach remains selective and service-led rather than volume-led.

Speaker #2: Which would be closer to 8 to 9 gigawatts annually. We will book one large offshore order this quarter but do not expect it will catch up for the offshore orders that have been pushed out for fiscal year 2027.

Speaker #2: In onshore, our approach remains selective and service-led rather than volume-led. Building a structurally attractive margin profile takes time because new unit deliveries must first expand and install the base in the future service portfolio.

Tobias Hang: Building a structurally attractive margin profile takes time because new unit deliveries must first expand an installed base in the future service portfolio. Longer term, the margin potential remains attractive, particularly in offshore, supported by longer product cycles, better industrialization, and sufficient annual market volume. In parallel, our immediate priorities are to de-risk execution, reach cash breakeven and improve market visibility. Let me now briefly address Q4 phasing. Following an exceptionally strong Q3, we are confident that Q4 group margins will remain around the solid H1 level, fully in line with our consistent communication. This reflects the expected business mix and project pacing, normal service seasonality and Gas Services, planned corporate costs, and the anticipated year-end ramp-up in capital expenditure. Improving margin quality in the backlog, higher volumes, and continued operational excellence support further progression over time. Capital expenditure is back-end loaded into Q4.

Speaker #2: The longer term, the margin potential remains attractive, particularly in offshore. This is supported by longer product cycles, better industrialization, and sufficient annual market volume. In parallel, our immediate priorities are to de-risk execution, reach cash break-even, and improve market visibility.

Speaker #2: Let me now briefly address fourth quarter phasing. Following an exceptionally strong third quarter we are confident that fourth quarter group margins will remain around the solid first half level fully in line with our consistent communication.

Tobias Hang: Following an exceptionally strong Q3, we are confident that Q4 group margins will remain around the solid H1 level, fully in line with our consistent communication. This reflects the expected business mix and project pacing, normal service seasonality and Gas Services, planned corporate costs, and the anticipated year-end ramp-up in capital expenditure. Improving margin quality in the backlog, higher volumes, and continued operational excellence support further progression over time. Capital expenditure is back-end loaded into Q4.

Speaker #2: This reflects the expected business mix and project pacing, normal service seasonality in Gas Services, planned corporate costs, and the anticipated year-end ramp-up in capital expenditure.

Speaker #2: The improved margin quality in the backlog, higher volumes, and continued operational excellence support further progression over time. Capital expenditure is back-loaded into Q4.

Speaker #2: However lower than communicated at the CMD. And consistent with the typical fiscal year pattern including the ramp up of our capacity expansion programs. Overall we confirm that we expect group profitability to be at the upper end of the guidance range.

Tobias Hang: However, lower than communicated at the CMD, and consistent with a typical fiscal year pattern, including the ramp-up of our capacity expansion programs. Overall, we confirm that we expect group profitability to be at the upper end of the guidance range. Let me briefly touch on cash flow and capital allocation. Q4 includes back-end loaded capital expenditure and the usual working capital phasing. It's also important to distinguish between cash items and non-cash accruals. Q3 other line included reservation fees as well as personal-related accruals that affected profit but were not cash effective. Growing profitability and disciplined cash conversion are the structural foundation of our cash generation. Reservation fees provide additional support while we continue to target cash conversion above 1 throughout the cycle to remain a net cash company.

Speaker #2: Let me briefly touch on cash flow and capital allocation. The fourth quarter includes back-end loaded capital expenditure and the usual working capital phasing. It is also important to distinguish between cash items and non-cash accruals.

Tobias Hang: Q3 other line included reservation fees as well as personal-related accruals that affected profit but were not cash effective. Growing profitability and disciplined cash conversion are the structural foundation of our cash generation. Reservation fees provide additional support while we continue to target cash conversion above 1 throughout the cycle to remain a net cash company.

Speaker #2: Q3 other line included reservation fees, as well as personnel-related accruals that affected profit but were not cash effective. Strong profitability and disciplined cash conversion are the structural foundation of our cash generation.

Speaker #2: Reservation fees provide additional support, while we continue to target cash conversion above one throughout the cycle to remain a net cash company. On September 24th, we started the third tranche of our previously announced share buyback program of up to €6 billion.

Tobias Hang: On 24 September, we started the third tranche of our previously announced share buyback program of up to EUR 6 billion. This tranche comprises a volume of up to EUR 2 billion and is scheduled for completion no later than 31 March 2027. Our dividend policy remains unchanged and with a payout of 40% to 60% of net income attributable to Siemens Energy shareholders. For fiscal year 2026, total shareholder returns of more than EUR 3.6 billion include the fiscal year 2025 dividend paid this March, and the two share buyback program tranches of EUR 3 billion which have been concluded in fiscal year 2026, plus the lately initiated third share buyback tranche. We continue to review our capital allocation framework. A more comprehensive update, together with the full year financial framework and our midterm ambitions will be provided with fiscal year results in November. Finally, a few additional remarks.

Speaker #2: This tranche comprises a volume of up to €2 billion and is scheduled for completion no later than March 31, 2027. Our dividend policy remains unchanged, with a payout of 40 to 60 percent of net income attributable to Siemens Energy shareholders.

Speaker #2: For fiscal year 2026 total shareholder returns of more than 3.6 billion euro include the fiscal year 2025 dividend paid this March and the two share buyback program tranches of 3 billion euros which have been concluded in fiscal year 2026 plus we lately initiated third share buyback tranche.

Tobias Hang: For fiscal year 2026, total shareholder returns of more than EUR 3.6 billion include the fiscal year 2025 dividend paid this March, and the two share buyback program tranches of EUR 3 billion which have been concluded in fiscal year 2026, plus the lately initiated third share buyback tranche. We continue to review our capital allocation framework. A more comprehensive update, together with the full year financial framework and our midterm ambitions will be provided with fiscal year results in November. Finally, a few additional remarks.

Speaker #2: We continue to review our capital allocation framework. A more comprehensive update together with a full year financial framework and our midterm emissions will be provided with fiscal year results in November.

Speaker #2: Finally, a few additional remarks. In the United States, demand remains strong and projects continue to advance as permitting, interconnection timelines, and EPC capacity progress.

Tobias Hang: In the United States, demand remains strong and projects continue to advance as permitting interconnection timelines and EPC capacity progress. We have seen no data center project cancellation, and our reservation fees, advanced payments, and termination provisions provide robust economic protection. The US Bulk-Power System Executive Order is targeted rather than a blanket ban, with key implementation details still to come. Against a backdrop of strong US transformer demands that exceeds current domestic production capacity, the order's apparent focus on equipment, components, and digital access from sanctions or security sensitive jurisdictions could strengthen the position of trusted suppliers and create additional opportunities for Siemens Energy. Across all businesses, value over volume remains our guiding commercial principle. We continue to apply strict project selectivity, pricing discipline, and close customer engagement. Let me conclude with the key messages. First, demand across our core markets remains structurally strong, global and diversified.

Speaker #2: We have seen no data center project cancellations and our reservation fees advance payments and termination provisions provide robust economic protection. The US bought power equipment executive order is targeted.

Speaker #2: Rather than the blanket ban with key implementation details still to come. Against the backdrop of strong US transformer demands that exceeds current domestic production capacity the order's apparent focus on equipments components and digital access from sanctions or security sensitive jurisdictions could strengthen the position of trusted suppliers and create additional opportunities for Siemens Energy.

Tobias Hang: Against a backdrop of strong US transformer demands that exceeds current domestic production capacity, the order's apparent focus on equipment, components, and digital access from sanctions or security sensitive jurisdictions could strengthen the position of trusted suppliers and create additional opportunities for Siemens Energy. Across all businesses, value over volume remains our guiding commercial principle. We continue to apply strict project selectivity, pricing discipline, and close customer engagement. Let me conclude with the key messages. First, demand across our core markets remains structurally strong, global and diversified.

Speaker #2: Across all businesses, value over volume remains our guiding commercial principle. We continue to apply strict project selectivity, pricing discipline, and close customer engagement. Let me conclude with the key messages.

Speaker #2: First, demand across our core markets remains structurally strong, global, and diversified. The gas market continues to be supply-constrained. Grid technology continues to benefit from multiple long-term growth drivers, and data centers provide additional upside without being the sole foundation of either growth story.

Tobias Hang: The gas market continues to be supply constrained. Grid Technologies continues to benefit from multiple long-term growth drivers, and data centers provide additional upside without being the sole foundation of either growth story. Second, execution is a key priority. Capacity expansions are progressing as planned, backlog quality continues to improve, and the disciplined conversion of backlog into revenue, profit and cash underpins the next phase of value creation. Third, our business specific investment thesis remain unchanged. Gas Services continues to benefit from strong demand, attractive pricing and resilient recurring service revenues, where technologies deliver sustained growth and margin expansion through operational execution. Siemens Gamesa remains on track to achieve full-year breakeven, while Transformation of Industry continues to perform well as we prepare the business for potential separation from a position of strength. Finally, we reaffirm our upgraded fiscal year 2026 outlook.

Speaker #2: Second execution is a key priority. Capacity expansions are progressing as planned. Backlog quality continues to improve, and the disciplined conversion of backlog into revenue, profits, and cash underpins the next phase of value creation.

Speaker #2: Third, our business-specific investment thesis remains unchanged. Gas Services continues to benefit from strong demand, attractive pricing, and resilient recurring service revenues. Grid Technologies delivers sustained growth and margin expansion through operational execution.

Tobias Hang: Gas Services continues to benefit from strong demand, attractive pricing and resilient recurring service revenues, where technologies deliver sustained growth and margin expansion through operational execution. Siemens Gamesa remains on track to achieve full-year breakeven, while Transformation of Industry continues to perform well as we prepare the business for potential separation from a position of strength. Finally, we reaffirm our upgraded fiscal year 2026 outlook.

Speaker #2: Siemens Gamesa remains on track to achieve full year break even a transformation of industry continues to perform well as we prepare the business for potential separation from a position of strength.

Speaker #2: Finally, we reaffirm our upgraded fiscal year 2026 outlook. We continue to expect comparable revenue growth of 14 to 16 percent and a profit margin before special items of 10 to 12 percent, trending towards the upper end. Net income is expected to be around €4 billion, and free cash flow pre-tax of around €8 billion.

Tobias Hang: We continue to expect comparable revenue growth of 14% to 16%, and a profit margin before special items of 10% to 12% trending towards the upper end, net income of around EUR 4 billion, and free cash flow pre-tax of around EUR 8 billion. With that, we will start today's question and answer session. If you wish to ask a question, please press star one on your telephone keypad. If you no longer want to ask a question, please press star two. With that, I would just call right now Max Yates from Morgan Stanley for the first question.

Speaker #2: With that, we will start today's question and answer session. If you wish to ask a question, please press star one on your telephone keypad.

Speaker #2: If you no longer want to ask a question, please press *1, then *2. With that, I would like to call on Max Yates from Morgan Stanley for the first question.

Speaker #1: Thank you, Tobias. So I guess just my first question is on the market outlook comments—could you clarify? We talked about the 110 to 120 megawatts, and you said 10 to 20 gigawatts of additional demand on top of that, I guess.

Max Yates: Thank you, Tobias. My first question is on the market outlook comments. Could you clarify, you talked about 110 to 120 gigawatts, you said that you sort of 10 to 20 gigawatts of additional demand on top of that.

Speaker #2: Sorry the connection was quite bad I know it's just on my side but is that yeah.

Tobias Hang: Sorry, the connection was quite bad. I don't know if it's just on my side.

Max Yates: Sorry.

Tobias Hang: But is that, yeah.

Speaker #1: I was I was just saying so your mark that you've talked about is 100 to 110 gigawatts but I thought you also said that maybe there was an additional 10 to 20 gigawatts of demand on top of that which sounded new to me but I was just checking that I I heard that okay or is that not right.

Max Yates: I was just saying, your market that you've talked about is 100 to 110 gigawatts, but I thought you also said that maybe there was an additional 10 to 20 gigawatts of demand on top of that, which sounded new to me. I was just checking that I heard that okay, or is that not right?

Speaker #2: No no that's a fix a lot Max then I've heard it correctly yeah so so we continue to say that we are now or increase the market from the last capital market view to 110 to 120 gigawatts but we see additional potential upside from data centers of 10 to 20 gigawatts.

Tobias Hang: Oh, thanks a lot, Max. Then I've heard it correctly. Yeah. We continue to say that we now increased the market from the last Capital Market Day to 110 to 120 gigawatts, but we see additional potential upside from data centers of 10 to 20 gigawatts. So that means potentially it might be a market of roughly 130 to 140, depending on how the data center demand will be turning out.

Speaker #2: So that means, potentially, it might be a market of roughly 130 to 140, depending on how the data center demand will turn out.

Speaker #1: Okay, and maybe just one quick clarification. Obviously, grid margin got quite a wide guidance.

Max Yates: Okay. And maybe just one quick clarification. Obviously, Grid Technologies margin, quite a wide guidance.

Speaker #2: I think I've lost you sorry.

Tobias Hang: I think I've lost you. Sorry.

Max Yates: Can you hear me now?

Speaker #1: Can you hear me now?

Speaker #2: Yeah I hope I hope.

Tobias Hang: Yeah, I hope.

Speaker #1: Yeah, okay, well, just very quickly—Q4 in grid has a very wide range of outcomes because of the guidance. You know, the guidance is quite wide.

Max Yates: Well, just very quickly, Q4 in Grid Technologies has a very wide range of outcomes because of the guidance. The guidance is quite wide. I guess what I am trying to understand is, when we think about sequential margin progress, do you see yourself trending towards the upper end of the full-year Grid Technologies guidance or more midpoint or more lower end? Just to get a kind of sense of rough ballpark for that Q4, because obviously it is a very wide range of outcomes depending on where you come.

Speaker #1: I guess what I'm trying to understand is you know when we think about sort of sequential margin progress you know do you do you see yourself trending towards the upper end of the full year grid guidance or you know more midpoint or more lower end just to get a kind of sense of you know rough ballpark for that Q4 because obviously it's a very wide range of outcomes depending on where you come.

Speaker #2: I mean, thanks, Max, for this question. Generally, as you might have noticed, we have not really specified further the guidance for the individual business area.

Tobias Hang: Thanks, Max, for this question. Generally, as you might have noticed, we have not really specified further the guidance for the individual business area. That means we did not really show or talk about any trends there. What you still have to consider, though, is, and that is what we already mentioned in Q2, is that the additional revenue growth we could see from the capacity additions which came online from our brownfield extensions, certainly on the one hand, provided us additional revenue and therefore also a certain margin extension. Therefore, I think it was quite easy in Q2 when we upgraded our margin to somehow do the math where we should be getting into if you, let us say, would take it to the midpoint of the guidance.

Speaker #2: So that means we didn't really show or talk about any trends there. What you still have to consider, though, and this is what we already mentioned in Q3, is that the additional revenue growth we could see from the capacity additions which came online from our ground feed expansions.

Speaker #2: Certainly, on the one hand, it provided us additional revenue, and therefore also a certain margin expansion. So, therefore, I think it was quite easy in Q2 when we upgraded our margin to somehow do the math where we should be getting into, if you, let's say, would take it to the midpoint of the guidance.

Speaker #2: So, therefore, I would expect that there is a certain margin progression or continuation due to the fact that we have higher revenues within Grid Technologies after the capacity expansion.

Tobias Hang: Therefore, I would expect that there is a certain margin progression or continuing due to the fact that we have higher revenues within Grid Technologies after the capacity expansion.

Speaker #1: That that's great. Thank you.

Max Yates: That is great. Thank you.

Speaker #2: Thank you so much. As we as I'm seeing that everything seemed to be quite clear so far. I mean I also have to admit we had quite a long intro I don't see any additional questions so therefore thank you so much for participating in today's call and with that we will conclude our pre-close call today.

Tobias Hang: Thank you so much. As I am seeing that everything seems to be quite clear so far, I also have to admit we had quite a long intro. I do not see any additional questions. Therefore, thank you so much for participating in today's call. With that, we will conclude our pre-close call today. Thank you very much for your participation and your continued engagement. Have a wonderful evening or afternoon, and please mark in your calendars again, 11 November 2026, when we will have our Q4 full-year results released. Thanks a lot, and a good afternoon. Bye-bye.

Speaker #2: Thank you very much for your participation and your continued engagement. Have a wonderful evening or afternoon, and please mark your calendars for November 11, 2026, when we will release our Q4 full year results.

Speaker #2: Thanks a lot. And have a good afternoon. Bye bye.

Operator: With that, we will conclude our pre-close call today. Thank you very much for your participation and for your continued engagement. Have a wonderful evening or afternoon, and please mark your calendars again on 11 November 2026. Goodbye.

Speaker #1: With that we will conclude our pre-close call today. Thank you very much for your participation and for your continued engagement. Have a wonderful evening or afternoon and please mark your calendars again on November 11th 2026.