Siemens Energy

Overview

Siemens Energy is one of the world's largest energy technology companies, spun off from Siemens AG in September 2020. It competes with GE Vernova across nearly every major product line: gas turbines, wind turbines, high-voltage transmission equipment, grid automation, and industrial electrification. With approximately 103,000 employees across more than 90 countries, it generated €39.1 billion of revenue in FY2025. Its fiscal year ends September 30.

The company runs four segments: Gas Services, covering gas turbines and service contracts; Grid Technologies, covering transformers, switchgear, and HVDC systems; Transformation of Industry, covering electrification and decarbonization of industrial processes; and Siemens Gamesa Renewable Energy, the wind turbine manufacturer it took fully private in 2023 and now wholly owns. Gamesa has been the dominant drag on financials since the spin-off, generating billions in losses and requiring a roughly €4 billion buyout plus a state-backed guarantee package Siemens Energy has since exited early as its finances recovered.

Business segments

The Gamesa crisis

The Siemens Gamesa situation is one of the largest industrial failures in the European energy sector in the past decade. The core problem came from the onshore turbine platform: internal quality audits in 2022 revealed systematic defects, primarily blade and bearing issues, across a large portion of the installed fleet. The scale of the warranty liability was initially underestimated, then revised sharply upward as the scope of affected units became clear. Simultaneously, the offshore business was absorbing massive losses from fixed-price contracts signed before the inflation shock of 2021 and 2022, when steel, copper, and logistics costs rose sharply.

That forced a profit warning in June 2023 which wiped roughly 35% off market capitalization in a single day, one of the largest one-day drops in DAX history. The company approached the German government for support, and a €7.5 billion package was assembled, including state guarantees and a bank consortium, to backstop Gamesa's balance sheet and fund full privatization. The episode raised serious questions about the due diligence conducted when Gamesa merged with Siemens Wind Power in 2017 and about the governance of the subsidiary after the spin-off.

By FY2025 the recovery was well advanced. Gamesa's losses narrowed as the onshore quality remediation program progressed and the offshore business selectively repriced contracts, and an improved balance sheet let Siemens Energy exit the federally backed guarantee facility ahead of schedule in 2025, swapping the roughly €11 billion government-supported line for a smaller bank facility and clearing the way to resume dividends. Whether Gamesa reaches its targeted breakeven in the fourth quarter of FY2026, or whether further provisions emerge, remains a key swing factor.

Strategy & outlook

The path to sustained profitability runs on two parallel tracks: stabilizing Gamesa while scaling Grid Technologies. Grid Technologies benefits from structural tailwinds that will last a decade or more, including transformer shortages, grid expansion for renewables, and HVDC buildout, and its backlog provides visibility well into 2027 and beyond. Gas Services provides stable cash generation from the installed turbine base.

The record backlog of €138 billion as of FY2025, roughly 3.5 years of revenue, reflects genuine demand strength across Grid Technologies and Gas Services. With FY2025 profit before special items reaching €2.36 billion at a 6% margin, management raised guidance and now targets a 14% to 16% group margin before special items by 2028, with segment targets of 18% to 20% at Gas Services and Grid Technologies, 12% to 14% at Transformation of Industry, and 3% to 5% at a recovering Gamesa. For FY2026 it guides to 14% to 16% comparable revenue growth and roughly €4 billion of net income, after a record start with orders of about €17.6 billion in the first quarter and €17.7 billion in the second. CEO Christian Bruch, whose contract runs to 2030, and CFO Maria Ferraro have paired the recovery with a return of capital: the dividend was reinstated at €0.70 per share, 50% of net income, after suspension during the crisis, alongside a €6 billion capital-return program through 2028 that includes a €2 billion buyback.

Key considerations

Siemens Gamesa remains the largest single risk even as it recovers. It is still loss-making and not expected to break even before the fourth quarter of FY2026, so another round of warranty provisions, offshore contract write-downs, or quality discoveries could set back the recovery narrative that has driven the shares up more than tenfold from their 2023 lows. The offshore wind industry as a whole remains challenged, with project cancellations and developer financial stress limiting Gamesa's new order flow.

On the other side, Grid Technologies and Gas Services are genuinely capacity-constrained against multi-year demand. The transformer shortage in particular, driven by grid buildout for AI data centers, offshore wind connections, and electrification, is structural rather than cyclical. Siemens Energy is expanding transformer and gas-turbine manufacturing in the U.S. and Europe, including roughly $1 billion of U.S. investment and a $421 million expansion in North Carolina to build large power transformers and resume gas-turbine production in Charlotte. The split between structurally advantaged grid and gas businesses and a recovering wind business is the central tension in the investment case.

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